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Coca-Cola profits fall by 15%, to $1.75 billion

Press release   •   Apr 17, 2013 12:28 BST

Flagging sales in recession-hit Europe and restructuring costs in its home market have taken the fizz out of profits at United States soft drinks giant Coca-Cola.

The group said profits have fallen by 15%, to $1.75 billion in the first three months of the year, compared with $2.05 billion a year earlier, though the result was better than expected.

The world's largest beverage company has seen its results challenged by Americans reducing their soft-drink consumption, rising costs for raw materials and pockets of economic uncertainty, such as Europe and China.

Coca-Cola's chairman and chief executive, Muhtar Kent said that the company has "once again delivered solid growth against the backdrop of a still uncertain global economy".

By region, volume rose 1% in North America, 4% in Latin America, 3% in the Pacific region and 15% in Eurasia and Africa. Volume was flat in Europe, but improved from last year's fourth quarter.

The firm also unveiled a deal to unload some distribution to five US bottlers. The transaction by the maker of Fanta, Minute Maid and Sprite is not a surprise, but comes earlier than expected. The group aims to return to a franchise model in which it sells a syrup to bottlers, who then package and distribute it.

A franchising model lowers overhead costs for Coca-Cola because it means regional bottlers take on the responsibilities for delivering its drinks to supermarkets and other retailers. But the details on how exactly Coca-Cola plans to structure its franchise business in the US over the long term are still not clear.

Under the deal announced Thursday, for instance, Coca-Cola would still own the production plants in the affected territories. The bottlers, which are independent companies, would buy trucks and other equipment and deliver to expanded areas.

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