Coca-Cola Q3 Results Top Estimates; Backs FY17 Forecast

(RTTNews) - Beverages giant Coca-Cola Co. (KO) reported Wednesday higher net profit in its third quarter, while operating income declined on weak revenues and even volume. Adjusted earnings per share and top line beat market estimates. Further, the company maintained its forecast for fiscal 2017.

"Despite continued macroeconomic challenges in certain Latin American markets, emerging and developing markets saw improving trends, achieving slightly positive unit case volume growth. This was offset by the performance in developed markets, which was negatively impacted by weather and the cycling of strong results from the prior year," the company said in its statement.

For the third quarter, net income attributable to shareowners climbed 38 percent to $1.45 billion from last year's $1.05 billion. Earnings per share grew 40 percent to $0.33 from $0.24 a year ago.

Comparable earnings, on an adjusted basis, were $2.18 billion or $0.50 per share for the quarter, compared to $2.15 billion or $0.49 per share last year.

On average, 21 analysts polled by Thomson Reuters expected earnings of $0.49 per share for the quarter. Analysts' estimates typically exclude special items.

Operating income, meanwhile, declined 7 percent from last year to $2.12 billion. Operating margin grew 200 basis points. Comparable operating margin expanded 400 basis points, driven mainly by divestitures of lower-margin bottling businesses through refranchising.

Net revenues declined 15 percent to $9.08 billion from $10.63 billion last year, driven by 18 percent headwind from the ongoing refranchising of bottling territories. Analysts expected revenues of $8.72 billion for the quarter.

Organic revenues, however, grew 4 percent, driven by Price/Mix of 3 percent in an environment of persistent economic uncertainty in many parts of the world, the company noted. Core business organic revenues also grew 4 percent, supported by growth in each of the operating segments.

In the quarter, total unit case volume was even. Sparkling soft drinks volume was flat, Juice, dairy, and plant-based beverages volume went up 1 percent, while Water, enhanced water, and sports drinks volume dropped 1 percent. Tea and coffee volume grew 1 percent.

The Company said it gained value share in total nonalcoholic ready-to-drink beverages. The Company gained or maintained value share in sparkling soft drinks, juices, sports drinks, and ready-to-drink tea.

Looking ahead, Coca-Cola continues to expect full-year 2017 comparable earnings per share of flat to 2 percent decline from $1.91 last year.

For 2017, the company still expects approximately 3 percent growth in organic revenues, 7 percent to 8 percent growth in comparable currency neutral income before income taxes driven by strong operating performance partially offset by the impact of an increasing interest rate environment.

Full Year 2018, the company still expects comparable net revenues of 16 percent to 17 percent headwind from acquisitions, divestitures, and structural items.

Coca-Cola shares closed Tuesday's trading at $46.18, down 0.30 percent.