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Coca Cola tops profit estimates with higher prices, less sugar

Jul 23 2019 13:56
Craig Giammona

Coca-Cola posted profit that beat estimates as the beverage giant got another boost from drinks with less sugar, more than offsetting the company’s sluggish home market.

Global unit case volume rose 3% in the second quarter, helped by a 7% spike in Asia, where Chinese consumers have been key to the company’s success this year. The metric slipped in North America for the third straight quarter.

Key Insights

Coke, grappling with the strong dollar, has already warned that earnings will be roughly flat this year. It updated its forecast for the full year Tuesday, saying it now expects to post organic revenue growth of 5%, up from the 4% target it had issued earlier.

At the same time, it expects stronger-than-expected currency effects the rest of the year. Coke, like its chief rival PepsiCo, has struggled to boost beverage consumption in its home market.

The company’s North America unit has benefited from higher prices on drinks, while less-sweet beverages have helped boost results.

Coca-Cola Zero Sugar logged a seventh straight quarter of double-digit volume growth globally, it said.

The company is pushing deeper into the canned coffee market after its high-profile acquisition of the British cafe chain Costa for $5.1 billion.

Coca-Cola HBC, one of the company’s bottlers, recently said it will launch Costa Coffee in at least 10 markets in 2020, including Russia, Bulgaria, Greece and Poland.

Market Reaction

Coke shares rose as much as 2.3% in early trading in New York as of 07:05. The stock had gained 8.2% through Monday’s close, lagging the performance of PepsiCo and the S&P 500.



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