Coca-Cola forecasts drop in 2017 profit on refranchising costs

[February 09, 2017]  (Reuters) - Coca-Cola Co <KO.N> forecast a drop in full-year adjusted profit, hurt by higher costs for refranchising its bottling operations in North America.

The world's largest beverage maker's shares were down 2 percent at $41.12 in premarket trading on Thursday.

Coca-Cola has been offloading much of its bottling business to cope with falling demand for carbonated beverages in North America.

The company said on Thursday it was on track to complete refranchising of its U.S. bottling operations by the end of this year.

Charges related to the refranchising of its U.S. bottling operations look to be a more meaningful drag on the company's full-year profit than analysts were expecting, brokerage Cowen & Co said in a note to clients on Thursday.

The company forecast 2017 adjusted earnings to fall 1-4 percent from $1.91 per share in 2016. Analysts on average were expecting earnings of $1.97, according to Thomson Reuters I/B/E/S.

Net income attributable to the company's shareholders more than halved to $550 million, or 13 cents per share, in the fourth quarter ended Dec. 31, from $1.24 billion, or 28 cents per share, a year earlier.

The quarter included a $919 million charge related to the refranchising of its bottling operations.

Coca-cola soda is shown on display during a preview of a new Walmart Super Center prior to its opening in Compton, California, U.S., January 10, 2017. REUTERS/Mike Blake

Excluding items, the company earned 37 cents per share, in line with estimates.

Net operating revenue fell about 6 percent to $9.41 billion, the seventh straight drop, but beat estimates of $9.13 billion, helped by higher sales of its sodas in North America, its biggest market.

Volume sales rose 1 percent in North America, including a 1 percent growth in sales of its carbonated sodas such as Sprite and Fanta.

However, global volume sales for the company fell 1 percent in the fourth quarter, hurt by high levels of inflation in certain Latin American countries.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Shounak Dasgupta)

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