Saturday, July 14, 2018
Business

Healthy drinks help Coca-Cola beat expectations despite $3.6bn tax charge

Coca-Cola Co's better-than-expected results this afternoon have bumped up shares by 1.54 per cent in pre-market trading, despite revealing a $3.6bn hit from new tax laws.

The New York-listed drinks company made a net loss of $2.75bn in the fourth quarter of 2017, mainly due to the one-off charge which many companies have suffered as President Trump lowered the rate of corporation tax.

But organic sales, or those flowing from the company's existing operations, rose six per cent as demand rose for products such as Georgia Coffee and Glaceau vitamin water.

"We achieved or exceeded our full year guidance while driving significant change as we continued to transform into a total beverage company," said Coca-Cola's chief executive James Quincey. "While there is still much work to do, I am encouraged by our momentum as we head into 2018."

Net operating revenue beat average analyst estimates, but fell 15 per cent year-on-year to $35.4 billion for the full year. Coca-Cola has been trying to reshape itself "to be more nimble and entrepreneurial", and said it had been impacted by headwinds from the ongoing refranchising of bottling territories.

Read more: Coca-Cola to recycle one bottle or can for each one it sells by 2030

Divesting of some bottle businesses did however improve margin, by 55 percentage points over the whole year.

As the sugar tax approaches in the UK, set to come into force in April, sales of reduced-sugar drinks performed well.

"Coca-Cola Zero Sugar had another strong year, growing over 38 per cent, and it was pleasing to see Fanta grow by 20 per cent in a year in which we changed the recipe to reduce its sugar content," said Jon Woods, general manager of Coca-Cola Great Britain and Ireland.

"This year we will move into new categories and tap into consumer trends like fruit teas and plant-based dairy alternatives. We will launch three brand new products in one year: Fuze Tea, a ready-to-drink tea; Honest Coffee, a ready-to-drink organic cold coffee and a range of plant-based, dairy-free smoothies called AdeZ.

As competitors such as Fever Tree continue to encroach, Woods said the business will also be focusing on its Schweppes mixers.

"By 2020, our ambition is to double the size of our stills business and generate 50 per cent of our revenue growth from new brands," he said.

Read more: Sugar-free Coke recipes matches classic Coca-Cola sales for the first time as consumers turn to healthier options

Original Article

Leave a Reply