Saturday 23 September 2023

Coca-Cola shares had worst day in a decade after a disappointing outlook

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ATLANTA, U.S. – A weak annual outlook from Coca-Cola overshadowed solid quarterly results Thursday, wiping out its stock gains for the year and setting off the worst sell-off of company shares in more than a decade. Coca-Cola issued a disappointing forecast of 4% growth in 2019 due to the global economic slowdown, a strong dollar and political uncertainty.

Net income totaled $870 million, or 20 cents per share, after a loss of $2.75 million, or 65 cents per share, last year. Adjusted EPS was 43 cents, in line with the FactSet consensus. Revenue was $7.06 billion, down from $7.51 billion and just below the $7.07 billion FactSet consensus.

For the year, sparkling soft drinks grew 2%, with double-digit growth in Coca-Cola Zero Sugar. Juice, dairy and plant-based beverages fell 1%. Water, enhanced water and sports drinks were up 3%.

Tea and coffee grew 3% in the quarter and 1% for the year, largely driven by innovation and new product launches including Georgia Craftsman in Japan and Authentic Tea House in China.

Shares of Coca-Cola slumped 8% on the news, marking its worst trading day since October 2008.

Global companies like McDonald’s (MCD) and others have warned that a hard Brexit will result in “significant” disruptions to their supply chains. And businesses remain on edge as US and Chinese negotiators try to strike a deal before the start of March, when the US government is due to sharply raise tariffs on Chinese goods.

CEO James Quincey said higher tax rates, currency fluctuations and volatility in emerging markets will all be headwinds in 2019.

“Consumers are under more pressure as we head into the new year,” Quincey said in a conference call with analysts.

Quincey believes Coke could still see an upside, noting stronger-than-expected sales in China and Brazil to start the year.

This month, the company launched Orange Vanilla Coke and Orange Vanilla Coke Zero Sugar in the U.S., the first alteration of its flagship brand in 11 years.

Coca-Cola is also becoming a big player in the coffee market with its 2018 purchase of U.K. brand Costa Limited, the largest acquisition ever by the company.

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