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Coca-Cola to cut 1,200 jobs, boosts savings target
April 25, 2017 / 11:06 AM / 6 months ago

Coca-Cola to cut 1,200 jobs, boosts savings target

(Reuters) - Coca-Cola Co said on Tuesday it would cut about 1,200 jobs as the beverage maker expands its savings target amid falling demand for fizzy drinks globally.

Bottles of Coca-Cola are pictured in a cooler during a news conference in Paris, France, April 20, 2017. REUTERS/Benoit Tessier

Shares of the Dow component were up marginally at $43.39.

Coca-Cola and rival PepsiCo Inc’s soda sales have taken a hit as consumers in North America and Europe increasingly shun sugary drinks.

Global soda sales fell 1 percent in the first quarter ended March 31, Coca-Cola said on Tuesday.

The Atlanta-based company said it was increasing its cost-cutting target by $800 million in annualized savings and now expects to save $3.8 billion by 2019.

The majority of the additional savings would come from the corporate job reductions, incoming Chief Executive James Quincey said on a post-earnings conference call.

The company, which also reported a smaller-than-expected quarterly profit, said it expects to reinvest at least half of the $800 million saved to mainly boost growth in its non-carbonated drink business.

“We are not too worried about this quarter’s miss,” RBC Capital Markets analyst Nik Modi wrote in a note.

“The important thing is that KO is raising its cost-saving estimates and we believe there is more to go.”

The job cuts would start in the second half of 2017 and carry into 2018, Coca-Cola said.

The company also forecast a smaller decline in 2017 adjusted profit than it had previously expected.

Coca-Cola said on Tuesday it expects full-year adjusted profit to fall 1-3 percent, compared with the 1-4 percent decline it forecast in February.

The company is offloading much of its low-margin bottling business to reduce expenses, but costs associated with the refranchising have been higher than expected, weighing on profit.

Coca-Cola said it recorded a charge of $84 million related to the refranchising in North America in the latest quarter.

Net income attributable to the company’s shareholders fell 20.3 percent to $1.18 billion, or 27 cents per share, from a year earlier.

Excluding items, the company earned 43 cents per share, missing analysts estimates by a cent, according to Thomson Reuters I/B/E/S.

Revenue fell 11.3 percent to $9.12 billion, declining for the eighth straight quarter.

Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila

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