Coca-Cola profit surprises, announces U.S. bottler deal
By Martinne Geller
(Reuters) - Coca-Cola Co (KO.N: Quote) reported a slightly higher-than-expected quarterly profit on Tuesday and announced a deal to unload some distribution territory to five independent U.S. bottlers, sending its shares up more than 5 percent in morning trading.
The move by the maker of Sprite, Fanta and Minute Maid is "a major step in the transformation of its U.S. production and distribution," said Stifel Nicolaus analyst Mark Swartzberg.
It is not a surprise, but comes earlier than expected.
Coke bought the North American operations of bottler Coca-Cola Enterprises Inc CCE.N in October 2010, following a similar move by PepsiCo Inc (PEP.N: Quote) aimed at cutting costs and streamlining innovation and decision-making.
Coke Chief Executive Muhtar Kent said at the time that he still believed in the so-called franchise model - where Coke sells syrup to independent bottlers who package and distribute the drinks - suggesting that the company would eventually return to it. Coke had generally laid out a timeline of three to five years for that transition.
As for performance in the first quarter, the world's largest soft-drink maker said net income was $1.75 billion, or 39 cents per share, down from $2.05 billion, or 45 cents per share, a year earlier. Earnings were hurt by a calendar shift that resulted in two fewer selling days in the quarter compared with last year.
Excluding one-time items, earnings were 46 cents per share, topping analysts' average estimate of 45 cents, according to Thomson Reuters I/B/E/S.
Revenue slipped 1 percent to $11.04 billion, hurt by currency exchange rates and sales lost through the refranchising of some other bottler assets. Sales by volume rose 4 percent. Continued...