Coke's Profit Falls Prompting Firm to Expand Cost-Cutting Drive
Coca-Cola's profit falls prompting firm to expand cost-cutting driveReuters

Coca-Cola's stock dropped on 21 October after the firm warned that it could miss its long-term profit targets.

Coke's stock was trading 6.49% lower to $40.48 at 10.06 EDT in New York after the firm said it expected to miss its long-term earnings growth target in 2014, partly because of currency fluctuations.

The world's largest beverage maker forecast a six percentage point impact from currency on full-year operating income, which is on the high-end of the outlook the company provided earlier in the year.

With its warning, the company also said it was targeting annual savings of $3bn (£1.8bn, €2.3bn) a year by 2019 through an expansion of its ongoing productivity initiatives.

Q3 Profit Falls

Coke on Tuesday said profit for the third-quarter ended 26 September fell 14% to $2.1bn or 48 cents a share, from $2.4bn, or 54 cents a share, a year ago.

The firm cited lower sales of carbonated beverage volumes in North America as the reason behind the drop in profit.

Overall revenue was flat at $11.97bn. Analysts had forecast a revenue of $12.12bn.

Coke said in a statement: "The Company expects to be below its long-term EPS growth target in 2014 and, based on the current outlook, does not expect comparable currency neutral EPS growth in 2015 to be significantly different from 2014..."

Chief executive Muhtar Kent said in the statement: "We are taking decisive action to position The Coca-Cola Company to continue delivering long-term value for our shareowners.

"We have taken a hard look at our progress to date and realise 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. 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. We are also evolving our 2020 Vision to reflect these changes."

"Within this context, we are maintaining our long-term high single-digit EPS growth target, while changing our operating income metric to profit before tax and adjusting our net revenue target to mid single-digit growth," Kent added.