The Coca-Cola Company Sees Profits Fall, Will Miss Guidance

The Coca-Cola Company (NYSE:KO) released its latest earnings report before opening bell this morning, reporting comparable earnings of 53 cents per share on $11.98 billion in revenue. Analysts had been looking for earnings per share of 53 cents on $12.14 billion in revenue.

Reported earnings per share fell 13% year over year to 48 cents. In the same quarter a year ago, Coca-Cola reported earnings of 54 cents per share on $12.03 billion in revenue.

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Key metrics from Coca-Cola’s earnings report

Coca-Cola reported net revenues were flat in the quarter. Excluding impacts from structural changes, net revenues increased by 1% in the September quarter. The beverage maker reported a 1% growth rate in global unit case volume and a 1% increase in global price per mix.

Reported operating income rose 10% in the quarter. Excluding impacts from structural changes, comparable currency neutral operating income rose 5%.

Coca-Cola’s results by segment

The company reported 1% growth in global sparkling beverage volume, although it reported a volume “and value share” in core sparkling beverages globally. Coca-Cola saw progress in North America and important emerging markets like India, the Middle East and Sub-Saharan Africa. Worldwide still beverage volume rose 2%.

The beverage maker reported a 5% growth rate in Eurasia and Africa, noting declines in all markets except the Russia, Ukraine and Belarus unit. In Europe, Coca-Cola saw a 5% decline in volume, with management citing bad weather, pressure from competition and a macroeconomic environment that is deteriorating.

In Latin America, volume increased by 2%, while in North America, Coca-Cola reported a 1% decline in sparkling beverage volume and a 1% decline in still beverage volume. Net revenues for the segment fell 2%.

In the Asia Pacific region, the company saw a 2% growth rate.

Coca-Cola expects to miss full year EPS guidance

The company expects a 1 to 2 point headwind on net revenues and about a 2 point headwind on operating income due to structural item impacts. Coca-Cola plans to franchise most of its company-owned bottling territories by the end of 2017 and targets $3 billion in annual savings by 2019.

The company also still expects negative impacts from changes in currency exchange rates.

Management expects flat to slightly positive operating leverage and plans to buy back $2.5 billion net shares. As a result, Coca-Cola expects to miss its previously provided long-term earnings per share growth rate for this year.