(Reuters) - Coca-Cola Co (KO.N) reported a bigger-than-expected drop in quarterly sales due to a strong dollar, and the company said it expected the currency to hurt its full-year revenue more than previously anticipated.
The soda maker, which gets more than half of its total revenue from markets outside North America, said a strong dollar would lower its full-year revenue by 7 percentage points compared with 6 percentage points estimated earlier.
The dollar has risen 12 percent against a basket of major currencies in the past year.
Coke has called 2015 a transition year as it tries to cut costs and boost sales by raising prices and diversifying into beverages beyond soft drinks such as cold-pressed juices and energy drinks. The company has said that it is targeting $3 billion in annual cost savings by 2019.
It is also selling back its North American bottling operations to franchisees in a move to reduce low-margin assets on its balance sheet. The company said on Wednesday it signed letters of intent with three U.S. bottlers to expand distribution areas in seven states.
Overall, Coca-Cola’s global sales volume rose 3 percent, driven by non-carbonated beverages such as ready-to-drink teas and juices.
In an interview, RBC Capital analyst Nik Modi called the growth healthy. He also noted that selling, general and administrative expenses, which declined 7 percent to $4.2 billion, were less than he expected, indicating that the company’s cost cutting was having an impact earlier than anticipated.
Revenue from North America, its biggest market, rose 1 percent, helped by higher pricing and expanded distribution of Monster Beverage Corp’s (MNST.O) energy drinks.
Asia Pacific was the only business where sales excluding impacts from acquisitions declined, indicating that consumers there are shifting from soft drinks to non-carbonated beverages like tea. “Coke is not as well positioned in those categories,” he said.
Shares fell 8 cents to $42.38 in early trading.
Coca-Cola’s net operating revenue fell nearly 5 percent to $11.43 billion in the quarter ended Oct. 2. Its organic revenue, which excludes the impact of currency movements and mergers and acquisitions, rose 3 percent.
Net income attributable to shareholders fell 31.3 percent to $1.45 billion, or 33 cents per share.
Excluding items, Coca-Cola earned 51 cents per share.
Analysts on average had expected a profit of 50 cents per share and revenue of $11.54 billion, according to Thomson Reuters I/B/E/S.
Reporting by Anjali Athavaley in New York and Sruthi Ramakrishnan in Bengaluru; Editing by Kirti Pandey and Phil Berlowitz