Coca-Cola 2Q Net Slips on Higher Costs; Revenue Up 2.7% |
| Wall Street Journal - Jul 17, 2012 |
Coca-Cola Co. (KO) continued to post solid sales growth in the second quarter as its global scope and introduction of more drink sizes at different prices helped the world's largest beverage company overcome pockets of economic uncertainty, including jitters in Europe and a cooling economy in China.
Coca-Cola now expects commodity costs to rise $300 million versus last year, about $50 million less than previously expected, due to a prolonged decline in prices for aluminum, plastic and other key inputs.
But that isn't going to translate to better margins. The company lowered its gross margin outlook for the year, due both to a stronger dollar and consumers acting more cautiously by buying more drinks to consume at home, rather than for immediate use.
Sales of two-liter bottles and 12-packs of cans bring lower margins to Coca-Cola than on-the-go sizes like 20-ounce bottles, and the shift to the form was a bit puzzling at Coca-Cola. Lower gasoline prices in recent months usually help boost sales of drinks at gas stations, for instance, but that didn't materialize as expected, Chief Financial Officer Gary Fayard said on Tuesday's earnings call.
Read Full Article from Wall Street Journal
- Posted: 2012-07-17 13:05:07
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