ATLANTA — This past February, the Coca-Cola Co. unveiled five strategies to restore company growth. The plan included such initiatives as accelerating sparkling beverage growth, expanding its still beverage portfolio, increasing media spend, improving point-of-sale execution, and investing in future leaders. On Oct. 21 the company said the five point plan was not enough and more needs to be done.
“We have taken a hard look at our progress to date and realize that while the strategies we laid out at the beginning of the year are on the right track, the scope and pace of our actions must increase,” said Muhtar Kent, chairman and chief executive officer. “In addition to announcing an expanded productivity program, we are streamlining our operations and further aligning our incentive plans to deliver against our growth objectives.”
The new initiatives announced Oct. 18 will include physical changes at the company, including streamlining and simplifying its operating model to speed decision making; targeting $3 billion in efficiencies by 2019 by restructuring the company’s supply chain, including manufacturing in North America; and refranchising company-owned bottling territories in North America.
“We remain confident in the vibrancy of the nonalcoholic ready-to-drink beverage industry and are determined to make the necessary changes to sustainably meet or exceed our long-term growth targets,” Mr. Kent said. “At the same time, we are cautious in our near-term outlook given challenging macroeconomic conditions.”
The company expects to be below its long-term earnings per share growth target in 2014 and, based on the current outlook, management does not expect comparable currency neutral e.p.s. growth in 2015 to be significantly different from 2014.
Coca-Cola net income during the third quarter ended Sept. 26 fell 14% to $2,114 million, equal to 48c per share on the common stock. Sales for the quarter were $11,976 million and flat compared to the same period of the previous year when revenues totaled $12,030 million.
On a regional basis, operating income fell 9% in Latin America and 5% in North America during the quarter. In Eurasia and Africa and Asia Pacific, Coca-Cola experienced 15% and 11% growth in operating income, respectively.For the first nine months of fiscal 2014, net income fell 8% to $6,328 million, equal to $1.42 per share. Revenues fell 2% during the period to $35,126 million.