The Atlanta-based company said it was increasing its cost-cutting target by 0 million in annualized savings and now expects to save .8 billion by 2019.(Reuters)
Coca-Cola Co said on Tuesday it would cut about 1,200 jobs as the beverage maker expands its savings target amid falling demand for fizzy drinks globally. Shares of the Dow component were up marginally at $43.39. Coca-Cola and rival PepsiCo Inc’s soda sales have taken a hit as consumers in North America and Europe increasingly shun sugary drinks. Global soda sales fell 1 percent in the first quarter ended March 31, Coca-Cola said on Tuesday. The Atlanta-based company said it was increasing its cost-cutting target by $800 million in annualized savings and now expects to save $3.8 billion by 2019.
The majority of the additional savings would come from the corporate job reductions, incoming Chief Executive James Quincey said on a post-earnings conference call. The company, which also reported a smaller-than-expected quarterly profit, said it expects to reinvest at least half of the $800 million saved to mainly boost growth in its non-carbonated drink business.
“We are not too worried about this quarter’s miss,” RBC Capital Markets analyst Nik Modi wrote in a note. “The important thing is that KO is raising its cost-saving estimates and we believe there is more to go.” The job cuts would start in the second half of 2017 and carry into 2018, Coca-Cola said.
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The company also forecast a smaller decline in 2017 adjusted profit than it had previously expected. Coca-Cola said on Tuesday it expects full-year adjusted profit to fall 1-3 percent, compared with the 1-4 percent decline it forecast in February.
The company is offloading much of its low-margin bottling business to reduce expenses, but costs associated with the refranchising have been higher than expected, weighing on profit. Coca-Cola said it recorded a charge of $84 million related to the refranchising in North America in the latest quarter.
Net income attributable to the company’s shareholders fell 20.3 percent to $1.18 billion, or 27 cents per share, from a year earlier. Excluding items, the company earned 43 cents per share, missing analysts estimates by a cent, according to Thomson Reuters I/B/E/S.
Revenue fell 11.3 percent to $9.12 billion, declining for the eighth straight quarter.