Coca-Cola profit beats on demand for juices, low-sugar sodas

By Sruthi Ramakrishnan

REUTERS - Coca-Cola Co's profit, in its first quarter under new Chief Executive James Quincey, beat analysts' estimates on higher-than-expected demand for its healthier non-carbonated beverages as well as low and no-sugar versions of its sodas.

Coca-Cola, like rival PepsiCo Inc, has been building its non-carbonated drinks portfolio and stepping up efforts to reduce sugar in its beverages as consumers look for healthier options.

While Coca-Cola's net revenue declined 16 percent in the quarter, as the company sells off its low-margin bottling operations, revenue from its core beverage business, or organic revenue, rose 3 percent, indicating strength in demand.

"Organic revenue growth in sparkling soft drinks was led by innovation in and marketing support for our low- and no-sugar options like Coca-Cola Zero Sugar," Quincey said in a statement.

Organic revenue was also boosted by higher unit sales of its mini-cans and small bottles, which have gained in popularity even as king-sized bottles fall out of favor.

There was some concern that Coca-Cola's organic revenue growth would be weak in the quarter, based on scanner data that showed weak beverage sales at convenience stores and PepsiCo reporting flat volume sales in North America for the quarter, JP Morgan analyst Andrea Teixeira said in a note.

While soda volume sales were flat, sales of low and no-calorie soda drinks rose in the mid-single digits in the second quarter ended June 30, the company said on Wednesday.

The world's largest beverages maker said it plans to introduce Coke Zero Sugar in the United States in August.

Coca-Cola said demand rose for its non-aerated drinks such as innocent juice and smoothies in Europe.

Net income attributable to Coca-Cola's shareholders fell 60.2 percent to $1.37 billion, or 32 cents per share.

Coca-Cola said it incurred a charge of $653 million related to refranchising its North America bottling operations.

Excluding items, Coca-Cola earned 59 cents per share, beating the average analysts' estimate of 57 cents, according to Thomson Reuters I/B/E/S.

Revenue fell to $9.70 billion but beat the average analysts' estimate of $9.65 billion.

The company also forecast adjusted 2017 profit to be flat or down 2 percent, compared with its previous forecast of a 1-3 percent decline, citing lower impact from currency exchange rates.

Coca-Cola's shares were largely flat at $45.34 on Wednesday.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Arun Koyyur)