Coca-Cola forecasts drop in 2017 profit amid refranchising
By Sruthi Ramakrishnan
(Reuters) - Coca-Cola Co (KO.N: Quote) forecast a surprise drop in full-year profit as costs related to refranchising its U.S. bottling operations are expected to be higher than previously anticipated.
The world's largest beverage maker's shares fell 3.1 percent to $40.73 in morning trading on Thursday.
Coca-Cola has been offloading much of its low-margin bottling business to cope with falling demand for carbonated beverages in North America.
It has also been stepping up efforts to reduce sugar in its beverages, amid growing pressure from health experts and governments who have blamed sugary drinks for a rise in obesity.
Coca-Cola, like rival PepsiCo Inc (PEP.N: Quote), has also been building its non-carbonated drinks portfolio. Global volumes of its non-carbonated drinks, which include tea, juices and energy drinks, rose 2 percent in the fourth quarter, while soda volumes fell 2 percent.
Costs related to the refranchising of Coca-Cola's U.S. bottling operations look to be a more meaningful drag on the company's full-year profit than analysts were expecting, brokerage Cowen & Co said in a note to clients.
The company forecast 2017 adjusted earnings to fall 1-4 percent from $1.91 per share in 2016. Analysts on average were expecting earnings of $1.97, according to Thomson Reuters I/B/E/S.
Net income attributable to the company's shareholders more than halved to $550 million, or 13 cents per share, in the fourth quarter ended Dec. 31, from $1.24 billion, or 28 cents per share, a year earlier. Continued...