Coca-Cola hit by disappointing sales, weak outlook

NEW YORK, United States – Soft drink giant Coca-Cola reported a dip in fourth-quarter profits due to lower-than-expected sales and offered a 2014 outlook that disappointed analysts.

The US beverage maker said weak economic conditions had pinched consumption, leading to an overall 3.6% decline in global revenues in the October-December period.

Sales in North America, which account for nearly 50% of revenues, slid 4.2% to $5.27 billion. Sales in the region are under pressure in part due to consumer avoidance of high-calorie beverages.

The Coca-Cola Company expressed confidence in its long-term prospects despite the lackluster fourth quarter.

“While we move forward in what remains an uncertain global economy, the long-term fundamentals driving our business and industry have not changed,” said chief executive Muhtar Kent.

“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.”

Net income for the fourth-quarter came in at $1.7 billion, down 8.4% from the year-ago level of $1.9 billion.

Quarterly earnings translated into 46 cents per share, matching expectations. Revenues were $11.04 billion, down 3.6% from a year ago and below the $11.31 billion forecast.

Annual earnings were $8.6 billion, down 4.8% from $9.0 billion in 2012.

Morgan Stanley said Coca-Cola’s quarterly volume growth of one percent missed the expected increase of three percent, with most regions underperforming.

Currency fluctuations dragged down operating earnings by 4% for 2013. The company projected that currency effects would drag down 2014 operating income by 7%, with a 10% hit in the first quarter of 2014.

Analysts also expressed disappointment at Coca-Cola’s projection that it would spend $2.5-$3.0 billion in 2014 on share repurchases, down from $3.5 billion in 2013.

Coca-Cola said it plans $1 billion in spending cuts that it will use to invest in additional marketing.

Coca-Cola, a Dow component, fell 3.4% to $37.60 in morning trade. – Rappler.com