Coca-Cola Helped by Strong North American Demand but Company Issues Lackluster Future Guidance
Coca-Cola announced strong quarterly results as the company reported strong demand in North America. Coca-Cola reported strong numbers for quarter ending by December 2016 but the company has reduced its guidance for year 2017. Coca-Cola is offloading most of its bottling operations in North America and this will lead to additional charges in 2017. The company will be refranchising its bottling operations in North America and has announced that there could be 1-4 percent drop in earnings in 2017.
Coca-Cola reported flat sales for soda and carbonated beverages but it reported stronger earnings in other segments. As people are becoming health conscious with rising awareness about obesity, Coca-Cola and other beverage companies face challenge of reducing sugar content in their carbonated beverages. In many overseas markets, Coca-Cola has ventured in other drinks segment to keep its earnings healthy.
With price increase, Coca-Cola reported stronger revenue in North America. During fourth quarter, Coca-Cola registered 1 percent decline in sales. The sale for non-carbonated beverages increased by 2 percent during last quarter while sale of carbonated beverages declined by two percent.
A report published by USA Today informed, “Overall, the company's revenue fell 6% to $9.4 billion for the fourth quarter. The company said that included a 2% decline attributable to foreign exchange rates and a 10% decline attributable to corporate deals and one-time items, which included bottling refranchising efforts.”
“In North America, net revenue rose 8 percent during the quarter, outperforming total retail value growth for both the North America nonalcoholic ready-to-drink beverage industry and U.S. consumer packaged goods companies," CEO Muhtar Kent said.