Coca-Cola soda
Weakness in developing markets pressured Coca-Cola's results in the second quarter.

ATLANTA — The Coca-Cola Co. lowered its forecast for full-year organic revenue growth to 3% from its previous target of 4% to 5%, after consolidated volume and revenue results came in below expectations in the recent quarter.

Net income attributable to shareowners of Coca-Cola in the second quarter ended July 1 was $3,448 million, equal to 79c per share on the common stock, up 11% from $3,108 million, or 71c, in the prior-year period. Net operating revenues declined 5% to $11,539 million from $12,156 million. The decline was driven by challenging macroeconomic conditions, structural changes and foreign exchange headwinds, the company said. Organic net revenue increased 3%, reflecting solid performance in developed markets offset by weakness in emerging and developing markets, including China and Argentina.

James Quincy, The Coca-Cola Co.
James Quincey, president and c.o.o for Coca-Cola

“Ultimately, we operate in over 200 countries, and there will always be some markets with macro challenges,” said James Quincey, president and chief operating officer, during a July 27 earnings call with financial analysts. “Our ability to grow doesn’t require macro perfection. In fact, even with this current broader macro adjustment phase in a good number of emerging markets, our segmented revenue growth strategies are enabling us to capture solid pricing of 3% year-to-date for our core operations on top of 1% volume growth. And we’re using the productivity to prudently fund marketing where there is momentum and where we see a solid payback.

“But we’re also holding on and making sure that we can use it to deliver strong underlying margin expansion. These actions have enabled us to grow underlying profit before tax in line with our expectations for the first half of the year and despite more challenging conditions than we initially expected.”

Coca-Cola bottling company facility
Coca-Cola remains on track to complete its refranchising efforts by the end of 2017.

Net income attributable to shareowners of Coca-Cola for the six months ended July 1 was $4,931 million, or $1.13 per share, up 6% from $4,665 million, or $1.06, in the same period of the prior year. Net operating revenues for the period declined 5% to $21,821 million from $22,867 million.

Coca-Cola remains on track to complete its refranchising efforts by the end of 2017, said Muhtar Kent, chairman and chief executive officer.

Muhtar Kent, Coca-Cola
Muhtar Kent, chairman and c.e.o. of Coca-Cola
“Over the past few months, we successfully completed the Coca-Cola European Partners and Coca-Cola Beverages Africa transactions, announced the transfer of certain territories of the United States to Arca Continental United Venture, and reached a new understanding with Coca-Cola FEMSA regarding joint value creation in Mexico and certain territorial expansion opportunities for company-owned bottling operations, which was announced just this morning,” Mr. Kent said. “As we work through the comprehensive refranchising and near-term macro challenges, we will emerge a much stronger company, with higher margins and returns, and better positioned to deliver on our long-term growth targets.”