Coca-Cola Q2 Profit Tops View; But Revenues Miss

(RTTNews) - Coca-Cola Co. (KO) posted a profit for the second-quarter that increased 11 percent from last year, while net operating revenues declined 5 percent. It is targeting full-year 2016 net share repurchases of $2.0 billion to $2.5 billion.

Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.

In Wednesday's pre-Market trade, KO is currently trading at $ 44.28, down $0.60 or 1.34 percent.

Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company said, "Despite challenging macroeconomic conditions, structural changes and foreign exchange headwinds which contributed to a 5% decline in reported revenues, we delivered 3% organic revenue growth, gained value share in total nonalcoholic ready-to-drink beverages, expanded our operating margins and grew profits in line with our expectations. Strong performance in some of our largest and most developed markets, including the United States, Mexico and Japan, was offset by difficult external conditions in many of our emerging and developing markets, including China and Argentina."

For the third quarter of 2016, the company estimates that based on the current spot rates, currency will be a 2 point headwind on comparable net revenues and a 2 to 3 point headwind on comparable income before taxes, including the impact of hedged positions.

The Company continues to expect comparable currency neutral income before taxes (structurally adjusted) to grow 6% to 8% in 2016, in line with our long-term target. The net impact of structural items is expected to be a 4 point headwind, and based on the current spot rates, currency is expected to be an 8 to 9 point headwind, including the impact of hedged positions for the full year.\

The Company expects full-year comparable EPS to be down 4% to 7% versus prior year's comparable EPS of $2.00.

The Company now expects organic revenues to be up 3% in 2016. The net impact of acquisitions, divestitures and structural items on net revenues is expected to be a 6 to 7 point headwind, and based on the current spot rates, currency is expected to be a 2 to 3 point headwind, including the impact of hedged positions for the full year.

Net income attributable to shareowners for the second-quarter grew 11 percent to $3.448 billion from the prior year's $3.108 billion, with earnings per share improving to $0.79 from $0.71 in the previous year.

On a non-GAAP basis, net income attributable to shareowners declined to $2.62 billion or $0.60 per share from $2.78 billion or $0.63 per share in last year's second quarter. Analysts polled by Thomson Reuters expected the company to report earnings of $0.58 per share for the second-quarter. Analysts' estimates typically exclude special items.

Reported EPS was $0.79 and comparable EPS was $0.60 in the quarter. Items impacting comparability increased reported EPS by a net $0.19 and were primarily related to a noncash gain recognized in connection with the deconsolidation of German bottling operations as a result of their being merged to create Coca-Cola European Partners, partially offset by noncash charges related to refranchising territories in North America and costs associated with our previously announced productivity and restructuring initiatives.

Net operating revenues for the quarter declined 5 percent to $11.539 billion from $12.156 billion last year. Wall Street expected revenues of $11.64 billion for the quarter.