The Coca-Cola Company reported Tuesday that its third-quarter profit fell 14 percent from a year earlier, as soda sales in North America declined and global demand remained flat. The world’s largest beverage company announced a cost-cutting program that aims to save $3 billion per year by 2019.
Coke’s revenue for the three-month period ended Sept. 26 fell to $11.98 billion compared with $12.03 billion a year ago. Analysts polled by Reuters had expected revenue of $12.12 billion. Net income fell to $2.1 billion, or 48 cents per share, from $2.4 billion, or 54 cents per share, a year earlier. Coca-Cola told investors on a call Tuesday morning that it expects to end the year at 6 to 8 percent profit growth before taxes, in part due to currency fluctuations. That growth is below its long-term earnings target of 8 to 9 percent annual growth.
“The bottom line is we can’t make the 6 to 8 percent pbt [profit before taxes] without a change in operating income,” said Kathy Waller, Coca-Cola’s executive vice president and chief financial officer. She added that productivity is increasing and on track to boost income through next year.
Coca-Cola said it would expand existing productivity initiatives by refranchising the majority of its company-owned North American bottling territories by the end of 2017 and territories overseas by 2020. The company plans to:
- improve the quality and quantity of its marketing;
- restructure its global supply chain, including manufacturing in North America, with changes such as using lighter-weight bottles; and
- simplify its operating model.
“While we are very confident in our actions, we are cautious in our outlook,” Muhtar Kent, chairman and CEO of Coca-Cola, said. The environment for non-alcoholic drinks is "tough," but "we know what can be done, and we will do it," he said.
The company said it would report more of its outlook for 2015 in December.