Restructuring takes fizz out of Coke profits | Fin24

Restructuring takes fizz out of Coke profits

Feb 10 2017 15:15

Atlanta - Coca-Cola's (Coke) profit fell 55% in the most recent quarter, as the world's biggest beverage maker restructures its business.

The company, which makes Fanta, Sprite and Powerade, is in the process of selling off its bottling businesses to independent companies that will bottle its sodas and other drinks.

Instead of bottling, Coke is focusing on marketing its brands and selling syrups and concentrates to the bottlers. The change means less revenue for Coca-Cola, but fewer costs.

"This is a pivotal time of change for our company," James Quincey, Coca-Cola's next CEO, told investors in a call on Thursday.

Quincey, who is currently Coca-Cola's number 2 executive, is preparing to succeed CEO Muhtar Kent in May. Quincey has led the company's drive to cut sugar in its drinks and wants to continue to do so as CEO. He said Thursday that the company will expand the Smartwater brand in Western Europe and offer more soda in smaller cans and bottles.

Coca-Cola earned $550m, or 13 cents per share, for the three months ending December 31. A year ago the Atlanta-based company earned $1.24bn, or 28c per share.

Earnings, adjusted for one-time costs and asset impairment costs, came to 37c per share. That's a penny better than what analysts polled by Zacks Investment Research anticipated.

Total revenue dropped to $9.41bn from $10bn, dragged down partly by a strong dollar, acquisitions and divestitures. Still, this managed to beat the $9.1bn in revenue that analysts surveyed by Zacks were calling for.

Global sales volume dipped 1%, with a 4% drop in Latin America and 1% increases in both North America and Europe. Sales of its sparkling beverages rose 1% in North America, its biggest market.

Shares of Coca-Cola fell 2.8%, to $40.83 in morning trading on Thursday.

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