Strong dollar dents Coca-Cola forecast, shares slide

By Aishwarya Venugopal

(Reuters) - Coca-Cola Co shares were set for their worst day in more than 10 years after the company forecast slowing sales in 2019, hit by a stronger dollar in the face of rising global economic uncertainty and lower demand for its fizzy sodas in some markets.

The stock was down 7 percent by late morning, also pressured by a broader retail rout sparked by data that showed a surprise drop in U.S. retails sales in December.

A stronger dollar is an added headache for companies like Coca-Cola and PepsiCo Inc that are already wrestling with rising freight and commodity costs even as they spend heavily on non-carbonated drinks to attract health conscious consumers.

Coca-Cola, which gets nearly two-thirds of its revenue from international markets, called out Middle East, Argentina and Turkey as being particularly weak and weighing on sales in the first half of 2019.

"We want to be prudent in our outlook guidance, given the macro environment," Chief Executive Officer James Quincey said on a post-earnings call. "Consumers are under more pressure as we head into the new year."

To counter rising costs, Coca-Cola has raised prices of its beverages. But that has come at the expense of demand - volumes fell 1 percent in North America in the fourth quarter, while Latin America was down 2 percent.

Coca-Cola forecast full-year profit to be between $2.06 and $2.10 per share, far below the average estimate of $2.23.

The company also said it expects core 2019 revenue growth of about 4 percent, down from 5 percent in 2018.

"The company seems to be playing it very conservatively on currency and taxes, but still a disappointment versus expectations," Bernstein analyst Ali Dibadj said.

Excluding one-time items, Coca-Cola said it earned 43 cents per share, in line with expectations.

Revenue fell 6 percent to $7.1 billion in the fourth quarter, hurt by the refranchising of its low-margin bottling operations. Analysts had estimated sales of $7.03 billion, according to IBES data from Refinitiv.

Coca-Cola's fourth quarter topline was decent, but there are concerns on the composition, with volumes being weak, Jefferies analyst Kevin Grundy said, adding that the quarter was "messy".

Shares of British soft drink bottler Coca Cola HBC AG fell 4 percent earlier in the day, after it warned of higher finance costs and weak consumer spending in several of its markets this year.

Coca-Cola rival PepsiCo will report results on Friday.

(Reporting by Aishwarya Venugopal in Bengaluru; Writing by Sweta Singh; Editing by Saumyadeb Chakrabarty)