Beverages giant Coca-Cola Co. (KO) reported Tuesday a 15 percent decline in first-quarter profit mainly reflecting charges and lower revenues. Adjusted earnings per share, however, increased from last year and topped analysts' estimates with good volume growth in key developed and emerging markets.
In addition, Coca-Cola announced the implementation of a new partnership model with five U.S. bottlers, including Coca-Cola Bottling Co. Consolidated (COKE), calling it a significant step toward its 2020 Vision.
In pre-market activity, Coca-Cola shares gained $1.31 or 3.27percent, and are currently trading at $41.40. On Monday, the shares had lost 2.41 percent.
In its first quarter, Coca-Cola's net income attributable to the shareowners declined to $1.75 billion from last year's $2.05 billion. Earnings per share dropped 13 percent to $0.39 from $0.45 a year before.
The company noted that certain items, including restructuring charges and other costs, impacting comparability reduced latest quarter earnings by $0.07 per share, while last year's results were benefited by a $0.01 per share gain.
Comparable earnings, which excluded items, grew 5 percent to $0.46 in the latest period. On average, 14 analysts polled by Thomson Reuters expected earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude one-time items.
Comparable currency neutral operating income grew 5 percent, in line with the company's expectations.
Net operating revenues edged down 1 percent to $11.04 billion, while it beat consensus estimate of $11.02 billion. Revenues were mainly hurt by impact from structural changes primarily reflecting the deconsolidation of the Philippine bottling operations and the acquisitions of the Vietnam, Cambodia and Guatemala bottling operations, as well as a 2 percent currency impact.
Excluding these impacts, net revenues grew 2 percent, despite two fewer selling days. The company said it achieved solid pricing across key markets around the world.
In the quarter, Coca-Cola reported worldwide volume growth of 4 percent, with 3 percent growth in Coca-Cola Americas and 5 percent growth in Coca-Cola International.
Global sparkling beverage volume grew 3 percent, led by brand Coca-Cola, and global still beverage volume increased 6 percent with growth across most beverage categories.
The company reported solid volume growth in key developed markets, including Germany, North America and Japan, while Europe volume was even with ongoing uncertain macroeconomic conditions and unseasonably cold weather.
Key emerging markets, including Thailand, India, Russia, Mexico and Brazil delivered strong volume growth, while China's volume increased slightly reflecting the economic slowdown and poor weather.
The company is targeting net share repurchases of $3 billion to $3.5 billion for the full year.
Coca-Cola revealed an agreement in principle with five U.S. bottlers to take the next step in creating a stronger U.S. business model through the granting of new, expanded territories. The transactions might include an outright territory sale, a territory swap, or a sub-bottling arrangement. The deals would be subject to the parties reaching definitive agreements by the end of 2013, with closings expected during 2014.
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