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Coca-Cola plans $1b in cost cuts as profit falls 8.4%

February 20, 2014

Coca-Cola Co, the world's largest beverage company, announced a $1 billion cost-cutting programme after fourth-quarter profit declined 8.4 per cent, hurt by slowing growth in emerging markets.

Net income slid to $1.71 billion, or 38 cents a share, in the period, from $1.87 billion, or 41 cents, a year earlier, Atlanta-based Coca-Cola said on Wednesday in a statement. Excluding some items, profit was 46 cents a share, matching the average of 16 analysts' estimates compiled by Bloomberg. Sales fell 3.6 per cent to $11 billion, trailing projections.

Chief Executive Officer Muhtar Kent, facing sluggish demand, said on Wednesday that Coca-Cola will reduce its supply and data-management costs and overhaul marketing programmes to generate $1 billion in savings by 2016. Global sales volume rose two per cent for the year and one per cent for the quarter, less than the four per cent annual and three per cent quarterly growth reported a year ago.

"Coke's problems are more macro than executional, although continued carbonated soft drink weakness is also having an impact," John Faucher, an analyst at JPMorgan Chase & Co in New York, said in a note before the results were released. He has a neutral rating on the shares.

Coca-Cola fell 1.1 per cent to $38.50 in early trading after the report was released. The shares had dropped 5.8 per cent this year through February 14, the most recent trading day, compared with a 0.5 per cent decline for the Standard & Poor's 500 Index. PepsiCo also slid 5.8 per cent in that period.

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Source: Khaleej Times (United Arab Emirates)

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