Coca-Cola Q2 earnings lack fizz
Wet weather, a bad economy and declining demand for sugary beverages take a toll, but the company remains confident about the second half of the year.
By Julie Balise
Wet weather and an adverse global economy put a dent in Coca-Cola Co.'s (KO) second-quarter earnings, CFO Gary Fayard said in an interview on CNBC Tuesday morning.
Fayard called the quarter "disappointing" in terms of volume, which dropped 1% in North America and 4% in Europe. "We had always said that along the road there'd be a bump here or there," he said. "We didn't expect the world to have a bump and the whole industry slowed down."
Bad weather hurt sales in North America, which had a cold, wet quarter, and India, where Monsoon rains started early. "We are an industry that is susceptible to weather," Fayard said. "We believe the weather is going to turn."
Slower consumer spending in China was also a factor. "I think the Chinese government is struggling with what to do right now," Fayard said. "But I think hopefully they'll get their act together and get China growth back up as well. That will help a lot of the rest of the emerging markets across the world."
A shrinking appetite for sugary beverages may also be to blame, according to the Associated Press, which pointed to a 4% drop in soda sales during the quarter. This has led Coca-Cola to focus on uncarbonated beverages, including SmartWater and Dasani, sales of which rose 5%.
Coca-Cola earned $2.68 billion, or 59 cents a share, in the quarter, down 4% from $2.79 billion, or 61 cents a share, a year ago.
The company will continue to invest in its brands, said Fayard, who is confident about the second half of the year. "Ours is a great industry," he stressed. "It's going to come back."
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