Coca-Cola sees improvement in first quarter as profits rise despite declining sales

The Coca-Cola Company reported a profit increase of 16% in the first quarter of 2018 to $1.37bn, thanks in part to initiatives implemented to drive profitability through revenue growth management initiatives.

The company said that unit case volume grew 3%, with a relaunch of its Coke Zero and Diet Coke brands in a bid to revive their sales. Diet Coke has faced declining popularity as consumers opt for low-sugar drinks with fewer calories that are healthier. The firm noted that Diet Coke returned to volume growth in North America following a full brand restage. The introduction of four bold, new flavours along with contemporary, sleek packaging and marketing helped boost sales. The growth was also helped by not only sodas but teas and coffees driving much of the gains.

Coke said that unit case volume in Europe, Middle East & Africa grew 4% in the quarter, driven by strong performance in Turkey, and South Africa, which partially offset declines in Nigeria and Western Europe.

Net revenue for the soft drink giant declined 16% in the quarter to $7.6bn, impacted by a 26% headwind from refranchising of bottling territories. Coke has been undergoing a broad restructuring as it moves away from bottling and distribution, which has affected its income statements in the past few years. The strategy is expected to drive higher operating margins as the company looks to become a more “asset-light” operation, but has impacted sales in the short term.

Commenting on the results, the CEO of Coca-Cola, James Quincey, said “We’re encouraged with our first quarter performance….We have the right strategies in place and remain confident in our ability to achieve our full year guidance.

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