Daily Management Review

Coca-Cola Profit Beat Estimates Helped By Juices And Low-Sugar Sodas


07/26/2017




Higher demand for its healthier non-carbonated beverages as well as low and no-sugar versions of its sodas drove Coca-Cola Co's profit, in its first quarter, as the company beat analysts' estimates under new Chief Executive James Quincey.
 
Like rival PepsiCo Inc, Coca-Cola has been stepping up efforts to reduce sugar in its beverages as consumers look for healthier options and has been in the process of building its non-carbonated drinks portfolio throughout the world.
 
"Organic revenue growth in sparkling soft drinks was led by innovation in and marketing support for our low- and no-sugar options like Coca-Cola Zero Sugar," Quincey said in a statement.
 
The company said on Wednesday that in the second quarter ended June 30, global volume sales of low and no-calorie soda drinks rose in the mid-single digits.
 
It plans to introduce Coke Zero Sugar in the United States in August, said the world's largest beverages maker,
 
In Europe, for its non-aerated drinks such as innocent juice and smoothies, there was growing demand, Coca-Cola said during the reporting.
 
Susquehanna analyst Pablo Zuanic wrote in a note that using higher prices as a driver of profit, broadening beverage portfolio and growing soda sales by reducing sugar content have been the current strategies for Coca Cola and the results show that the company is delivering on its strategic priorities.
 
For PepsiCo as well, the change in strategy is paying off well.  The profits of the company was able to beat analysts' estimate this month due to the growing demand for higher-margin healthier foods such as baked chips and smaller soda servings.
 
From $3.45 billion, or 79 cents per share, a year earlier, in the second quarter ended June 30, the net income attributable to Coca-Cola's shareholders fell to $1.37 billion, or 32 cents per share.
 
And as the company continues to sell most of its low-margin bottling business to cut costs, Coca-Cola incurred a charge of $653 million related to refranchising its North America bottling operations.
 
Beating the average analysts' estimate of 57 cents, according to Thomson Reuters I/B/E/S, excluding items, Coca-Cola earned 59 cents per share.
 
Hurt by the refranchising of bottling territories and a strong dollar, revenue fell 16 percent to $9.70 billion.
 
However, revenue beat the average analysts' estimate of $9.65 billion.
 
Compared with its previous forecast of a 1-3 percent decline, citing lower impact from currency exchange rates the company also forecast adjusted 2017 profit to be flat or down 2 percent.
 
Coca-Cola's shares were marginally up in premarket trading on Monday.
 
(Source:www.reuetrs.com) 






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