ATLANTA — Coca-Cola, the world’s largest beverage company, said on Tuesday second-quarter profit fell 4% as unseasonable weather and slowing economic growth restrained sales around the globe.
Net income fell to $2.68bn, or 59c per share, from $2.79bn, or 61c, a year earlier, Atlanta-based Coca-Cola said. Excluding some items, profit was 63c per share, matching the average of 16 analysts’ estimates.
CEO Muhtar Kent has looked to expand Coca-Cola’s reach in emerging markets and added smaller, more affordable package sizes to counter slowing growth in developed regions. Unseasonable weather around the world hurt consumption, as did slowing economic growth in China, struggling consumers in Europe and changing US beverage tastes.
"It’s like a quadruple whammy of bad news," said Thomas Mullarkey, an analyst for Morningstar in Chicago. "But they are still the global leading beverage company and even though it might be a short-term hiccup, long-term they continue to be able to invest for the success of the company."
Global sales volume increased 1%, less than the 3.3% average of four independent estimates. Europe sales volume slid 4% because of the weak economy and flooding in Germany.
China’s volume was little changed after a 7% gain a year earlier.
North America volumes fell 1% amid unseasonably cool weather. Revenue fell 2.6% to $12.7bn. Analysts estimated about $13bn, on average.
Coca-Cola slid 3% to $39.77 in New York. The stock earlier dropped as much as 3.7% for the biggest intraday decline since September 2011.
Coca-Cola increased 13% this year until Monday, compared with an 18% gain for the Standard & Poor’s 500 index.
China’s economic growth slowed for a second quarter to 7.5% in April-to-June, Monday’s National Bureau of Statistics report showed. Factory production rose 8.9% last month from a year earlier, equal to the lowest since 2009 excluding January and February, when the Chinese New Year holiday distorts statistics.
PepsiCo, the world’s second-largest soft-drink maker, is stepping up the fight there as well.
The company opened new factories and sought to expand distribution in China last year to narrow the gap with market leader Coca-Cola. In November, PepsiCo opened its largest research centre outside the US to help tailor beverage and snack food brands to Asian tastes and develop new products for the region.
Coca-Cola pushed farther into faster-growing emerging markets last month with the opening of a beverage plant in Myanmar. The company will invest $200m in the next five years.
Emerging markets are important as Coke deals with a declining soft-drink market in the US, driven by dwindling demand for full-calorie sodas. Beverage makers have come under increasing pressure in recent years as officials try to curb high obesity rates in the US by slowing consumption of sugary soft drinks.
New York City health officials have appealed a permanent injunction issued on March 11 to stop a health-department law pushed by New York City mayor Michael Bloomberg that would cap the size of soft drinks sold in restaurants, movie theatres, stadiums and arenas at 473ml a cup. Oral arguments were heard last month, and a ruling is pending.
Mr Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.