Coca-Cola profit tops estimates as cost cuts ease sales drop
[NEW YORK] Coca-Cola Co, the world's largest non- alcoholic beverage company, posted third-quarter profit that beat analysts' estimates as Chief Executive Officer Muhtar Kent's cost-cutting program cushioned the blow of weaker sales.
Profit was 51 cents a share, excluding some items, the Atlanta-based company said in a statement Wednesday. Analysts estimated 50 cents, on average. Sales, however, fell 4.6 per cent to US$11.4 billion, trailing analysts' $11.6 billion projection.
Kent has been working to counter the declining consumption of soda with a plan to trim US$3 billion in annual expenses by eliminating jobs and boosting productivity. He also has been revamping Coca-Cola's bottling system and selling smaller containers of its beverages at higher prices per ounce. While Coca-Cola has benefited from falling commodity costs, it has been hurt by the strength of the dollar, which reduces the value of its sales abroad.
Coca-Cola and peers PepsiCo Inc and Dr Pepper Snapple Group Inc have faced declining soda sales in recent years, hurt by concerns about sugar and artificial sweeteners. To help cope with the slump, Kent has said he'll plow some of the savings from Coca-Cola's cost cuts back into new marketing.
The company also is working to improve its margins by divesting its bottling operations. The beverage maker's primary business - selling concentrates and syrups to the companies that manufacture, package and distribute the drinks - is more profitable than capital-intensive bottling. Coca-Cola said last month that it plans to sell nine US production facilities with a combined book value of about US$380 million.
The company is looking beyond its traditional beverages for growth. Coca-Cola invested in Suja Life LLC, an organic-juice maker, in August with an option to buy the balance of the company in three years. Coca-Cola previously bought a stake in energy-drink maker Monster Beverage Corp and Keurig Green Mountain Inc, which sells single-serving coffee and cold drink pods.
BLOOMBERG
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