Emerging Markets Save Coca-Cola Earnings from Fizzing Out
Before Coca-Cola (NYSE:KO) reported third-quarter results early Tuesday morning, expectations were fairly modest. Soda drinkers the world over were expected to have tipped back about the same number of Cokes, Sprites, and Vitaminwaters as they had the previous quarter, giving investors little reason to bet shares up above year-ago levels. On Monday, shares closed up by just 35 cents, and shares were still trading around half a percent below year-ago levels. After the world’s largest drink manufacturer reported that net income rose 5.9 percent to $2.45 billion, or 54 cents per share, in the three months ended in September, shares inched up as much 1.9 percent to $38.62.
But revenue declined 2.5 percent to $12.03 billion. Analysts were prepared for less-than-stellar third quarter results. In fact, expectations were lowered late in the third quarter, a not unusual occurrence for the company. In the past nine years, Coca-Cola has lagged by consensus forecasts by more than 1 percent every quarter, until now.
Analysts had expected the company to increase net income from 50 cents per share in the year-ago quarter to 53 cents per share even though revenue did fall below expectations for $12.05 billion. “We delivered sound third-quarter results in the confines of an ongoing challenged macroeconomic environment driven by increasing volatility across emerging markets,” Chairman and Chief Executive Muhtar Kent said in the company’s earnings press release.