Coca-Cola Cuts Sales Forecast Affected by The Weak Soda Demand

Coca-Cola Company (NYSE: KO) released its second quarter earnings Wednesday morning, reported its revenue dropped 5% to $11.5 billion from $11.6 billion, which greatly affected by the weak soda demand aboard, especially in developing countries.  

The Atlanta beverage giant said second-quarter net income rose 11% to $3.45 billion, resulting in earnings of 79 cents a share, compared with earnings of $3.11 billion, or 71 cents a share, in the year-ago period. 

Shares lost 3.59% to $43.27 in morning trading as the company posted flat overall volume.

The decreasing soda volume weakened Coke’s sale in the international market. In China, Coke’s sale fell 2 percent on soft volume and slower sales growth caused by the weakening consumer sentiment and growing demand for premium water. Coca-Cola, like other multinational companies, is also struggling with high levels of inflation in some Latin American economies, including Brazil, Argentina. Volume also declined in Venezuela, where a sugar shortage forced the company to temporarily shut down production. In addition, the stronger U.S. dollar has also hurt the company, which generates about half its sales abroad but translates results into dollars.

In North America, the company’s largest market, Coke said it gained share in nonalcoholic ready-to-drink beverages for the 25th consecutive quarter. Higher prices and smaller packaging in the U.S. that costs consumers more per ounce has helped Coke offset those declines. In the quarter, Coke reported that its beverage volumes were flat world-wide but grew 1% in its key North American market.

The company said it now expects organic revenue. On Wednesday, Chief Executive Muhtar Kent said in the statement “challenging macroeconomic conditions, structural changes and foreign-exchange headwinds” dragged on the top line, but he pointed to 3% organic revenue growth.

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