Cost cuts, cheaper commodities help Coca-Cola top profit estimates

Tue Feb 9, 2016 12:02pm EST
 
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By Sruthi Ramakrishnan

(Reuters) - Coca-Cola Co (KO.N: Quote) reported a better-than-expected profit in the last three months of 2015, helped by aggressive cost-cutting and lower commodity costs.

The soda maker's revenue fell 8 percent, but surpassed analysts' average estimate, boosted by price hikes and the company's bet on smaller can and bottle sizes.

Coca-Cola's shares rose about 1 percent to $43.02 in morning trading on Tuesday.

The company, which is targeting $3 billion in annual savings by 2019, has been cutting costs through job reductions and selling some of its bottling operations and factories.

Coca-Cola said on Tuesday it would refranchise all its North America bottling operations by the end of 2017, three years earlier than expected, and also refranchise its bottling operations in China.

The refranchising would significantly reduce capital needs, while boosting margins and returns, the company said.

Coca-Cola's global sales volume rose 3 percent in the fourth quarter ended Dec. 31.

"In the United States, in particular, we have a price-pack architecture strategy promoting the mini cans and the 8-ounce glass bottles," Chief Financial Officer Kathy Waller told Reuters, adding that the strategy was doing well in the region.   Continued...

 
Workers stand near bottles of Coca-Cola on a newly inaugurated production line at the Cikedokan Plant in Bekasi, West Java near Jakarta March 31, 2015.  REUTERS/Darren Whiteside