Coca-Cola reported lower-than-expected quarterly revenue as higher sales in North America failed to make up for weakness in many of the company's emerging and developing markets, including China and Argentina.
Continue Reading Below
Shares of the world's largest beverage maker, which also cut its full-year organic revenue growth forecast, were down 2.2 percent at $43.89 in premarket trading on Wednesday.
"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," Chief Executive Muhtar Kent said in a statement.
The company said its China bottling operations posted weak volume performance, while sales of juice were also hurt.
Some Latin American economies, including Venezuela and Argentina, are facing high levels of inflation amidst political instability, weighing on revenues of several multinational companies. The region accounted for 9 percent of Coca-Cola's total revenue in 2015.
Coke said it would reassess local market initiatives in such markets where external headwinds have proven to be more severe than originally forecast.
The company said it now expects full-year organic revenue to grow 3 percent in 2016, down from its previous forecast of 4-5 percent growth.
Revenue from North America, the company's largest market, rose 2 percent in the second quarter ended July 1, while it fell in all other regions, partly hurt by inflation.
The company's net operating revenue fell 5.1 percent to $11.54 billion, the fifth straight quarter of decline.
Coke and smaller rival PepsiCo have been struggling as consumers increasingly turn health conscious and cut back on fizzy drinks and opt for teas, fruit juices and smoothies.
Coke has responded by building its non-carbonated drinks portfolio, expanding beyond North America and cutting costs by refranchising its bottling operations.
Net income attributable to shareholders rose 11 percent to $3.45 billion, or 79 cents per share, in the quarter.
Excluding items, the company earned 60 cents per share.
Analysts on average had expected earnings of 58 cents per share on revenue of $11.63 billion, according to Thomson Reuters I/B/E/S.
PepsiCo reported better-than-expected quarterly profit and revenue this month, buoyed by lower raw material costs and higher demand for Frito-Lay snacks and new beverages in North America.
Coca-Cola also said on Wednesday it signed letters of intent with two U.S. bottlers to expand distribution areas in two states.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)