Coca-Cola’s Profit Beats Expectations Thanks to Cost Cuts

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By Jacob Maslow

Coca-Cola Co. (NYSE: KO) reported third-quarter revenue that just trailed analyst estimates. A stronger dollar hurt sales overseas, and is pushing CEO Muhtar Kent to maintain his aggressive plan to cut costs.

Revenue for the company dropped to $11.4 billion, down 4.6%. Analysts were looking for revenue of $11.6 billion. A stronger dollar reduced sales by 8%, more than Coca-Cola’s original forecast of 7%.

So far, Kent has eliminated $3 billion in annual costs and is investing the savings in new product development and increased marketing. Coca-Cola is also combating declining soda consumption and a stronger dollar by selling its beverages in smaller containers at higher prices per ounce, and improving its bottling system.

Kent’s efforts have paid off. Coca-Cola reported a profit of $.51 a share (excluding some items), which beat analyst projections of $.50 a share. Net income dropped 31% to reach $1.45 billion, down from $2.11 billion the previous year.

Coca-Cola’s shares dropped 1.5% to trade at $41.65 early Wednesday morning. Through close of trading on Tuesday, the company stock is up 0.2% this year.

Coca-Cola isn’t the only beverage company combating declining sales. Dr. Pepper Snapple Group Inc. (NYSE: DPS) and PepsiCo Inc. (NYSE: PEP) are both battling a decline in soda consumption in developed markets. Coca-Cola’s unit case volume increased 2% globally, sales dropped 1% in North America. The company’s effort to boost prices reduced the impact by increasing global revenue by 3%.

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