Coca-Cola reported first-quarter earnings on Tuesday that fell slightly short of Wall Street expectations.
The company reported a 20 percent drop in quarterly profit, which was driven lower because of higher costs related to its refranchising efforts in Coca-Cola’s North America bottling operations.
Here’s what the company reported vs. what the Street was expecting:
- Earnings per share: 43 cents adjusted vs. estimate of 44 cents expected, according to Thomson Reuters analysts’ consensus.
- Revenue: $9.118 billion vs. the $8.874 billion projection.
Shares of Coca-Cola dipped slightly before turning positive in premarket trading.
Coca-Cola’s total sales fell 11.3 percent for the quarter, marking its eight consecutive quarterly decline in revenue.
“As anticipated, revenues in the quarter were adversely impacted by two fewer days and the shift of the Easter holiday,” Chief Executive Muhtar Kent said in a statement. Though, he added, “[Coca-Cola] remain[s] on track to deliver our underlying revenue and profit targets for the full year.”
The Atlanta-based company is in the midst of a management shuffle, as Coke’s current chief operating officer, James Quincey, is preparing to succeed CEOKent on May 1. In turn, Kent will remain Coke’s chairman.
The incoming CEO has said his plans for the company’s future include focusing on upping sales from smaller-sized packages and no-calorie sparkling beverages. Last quarter, smaller-package production grew about 10 percent in volume, while no-calorie colas saw accelerated growth in the second half of 2016.
Coke also warned earlier this year that its 2017 profit would drop as the company works to refranchise its bottling operations. Coke has said it expects to complete the refranchising efforts by the end of the year.
Just last quarter, the beverage giant reached a deal to refranchise its bottling operations in China — a market still ripe for growth.
Net revenue in the company’s flagship North American market rose 8 percent last quarter, “outperforming total retail value growth for both the North America nonalcoholic ready-to-drink beverage industry and U.S. consumer packaged goods companies,” current CEO Kent remarked.
Last week, Credit Suisse raised its rating for Coca-Cola shares to “outperform” from “neutral,” saying the beverage company’s new “asset-light” business model will drive profit growth over the next two years.
“After the refranchising, the core Coke business will deliver EPS growth not seen for at least the last five years,” analyst Laurent Grandet wrote in a note to clients.
As of Monday’s close, shares of Coca-Cola have declined a little more than 3 percent over the past year, but are up nearly 4.5 percent in the year-to-date period.
Source: FactSet
— CNBC’s Sarah Whitten and Tae Kim contributed to this report.