Coca-Cola (KO) Falls on Lower than Expected Revenues
Shares of Atlanta, GA, based Coca-Cola Company (KO) declined on Tuesday, falling $1.46, or 3.75%, to $37.47, on volume of 46,195,701 shares, on a mixed day on Wall Street. The company reported adjusted earnings of 46 cents per share, in line with advanced estimates. But revenue came in at $11.04 billion, below preliminary estimates.
The Coca-Cola Company is the largest soft drink distributor in the world.
The company primarily operates through its franchised distribution network, producing syrup concentrate that it sells to various bottling companies around the world. The company had over $48 billion in revenue for all of 2012, employs more than 146,000, and sells more than 3,500 products in over 200 countries. Despite reporting adjusted earnings that were in line with estimates at 46 cents per share, the revenue figure of $11.04 billion was down 3.6% from one year ago, and below advanced estimates of $11.31 billion. For all of 2013, earnings per share came in at $1.90, down 3% from 2012. Though revenue was up 1% during the fourth quarter, Wall Street was expecting a 3% increase. Tuesdays share price drop was the sharpest one day decline for Coca-Cola since August, 2011. The soft drink industry in North America in general has been in decline for nearly a decade, with sales of soda falling one percent overall in the past year. Earlier this month, Coca-Cola competitors, Pepsico (PEP
) and Dr. Pepper Snapple (DPS
), both revealed declining US sales. Consumers in the US market - Coca-Cola's largest single market - are moving away from sweet drinks like sodas, in favor of healthier lifestyle choices, that includes healthier eating. Tuesday's revenue report by Coca-Cola is seen as continuing evidence of this trend. Demand has also been slowing in China and India, as well as Mexico and Southern Europe, owing largely to slowing economies. In recognition of this and other market challenges, Coca-Cola CEO Muhtar Kent commented, "2013 was marked by ongoing global macroeconomic challenges in many markets around the world. (But) a rising middle class, greater urbanization and increasing personal consumption expenditures in markets around the world will continue to drive greater demand for our beverages." The company also announced that it would cut operating expenses by $1 billion by 2016 in an attempt to improve profitability. The expense cuts will center on data, information technology and its supply chain system, as well as revamping its marketing strategy. In addition, back on February 5, the company purchased a 10% stake in Green Mountain Coffee Roasters (GMCR
), and entered a partnership agreement with them to cooperate in the introduction and development of a global brand portfolio for use with the forthcoming Keurig Cold at-home beverage system. The system will be available later this year, or early in 2015. Other News About The Coca-Cola Company Coke Stock Should Rise on Green Mountain Deal
Coca-Cola's purchase of a 10% stake in Green Mountain Coffee Roasters has real potential. Connecticut Mayor Seeks State Soda Tax
A statewide tax on soda could hurt Coca-Cola and other major soft drink distributors. Other Stocks in the News Google Acquires SlickLogin
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Published on Feb 19, 2014
By Kevin Mercadante