Coca-Cola management just warned that the company would miss its long-term profit targets.
Shares are down 5.6% in early trading.
“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,” the company said in a statement.
With its warning, management announced new plans to boost profits including a new goal to generate $US3 billion in annualized cost savings by 2019.
“We are taking decisive action to position The Coca-Cola Company to continue delivering long-term value for our shareowners,” CEO Muhtar Kent said. “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.”
Coca-Cola has been scrambling to address consumers’ rapidly evolving tastes, which have been marked by falling demand for sugary sodas.
In Q3, Coca-Cola saw worldwide volume grow by just 1%.
“Global sparkling beverage volume was even in the quarter and grew 1% year to date as a challenging macroeconomic environment, adverse weather in certain regions, and competitive pressures in certain markets impacted results.
“Worldwide still beverage volume grew 2% in the quarter and 5% year to date, with tea contributing 4% volume growth in the quarter and both water and energy drinks volume growing 7%. Volume growth in these beverage categories was partially offset by a decline in juices and juice drinks, due in part to price increases to cover higher input costs in North America, and a decline in sports drinks.”