Atlanta-based Coca-Cola's sales declined in the first quarter as it restructured its business, and the world's biggest beverage maker said it will trim 1,200 jobs starting later this year as it deepens its cost cutting.
The maker of Fanta, Sprite and Smartwater has about 100,300 employees worldwide, according to FactSet, meaning the job cuts would represent about 1 percent of its workforce. Coca-Cola said the cuts would help it find another $800 million in annualized savings, in addition to the $3 billion it previously said it is trimming. Most those savings are expected to be realized in 2018 and 2019, the company said.
Coca-Cola Co. has also been reshaping its business by selling back its bottling and distribution operations to independent bottlers. That means Coke is becoming more focused on selling concentrates to bottlers and marketing for its brands as its No. 2 executive, James Quincey, prepares to officially take over as CEO next week.
While these necessary changes are always very difficult, they will help us do fewer things better to lead and support our operating units while upholding best in class corporate governance,” Quincy said in a conference call about the first quarter earnings.
Quincey has said he plans to focus on making Coke a "total beverage company," meaning it will more aggressively seek growth in promising drinks other than soda to better reflect changing tastes. The efforts have included putting more marketing behind options like Smartwater, including a carbonated variety of the bottled water.
“We are well on the way to designing the new corporate organization with a clear understanding of what work will stop, what work will shift to other areas, and what that means to our people,” Quincy said.
When excluding the impact of refranchising, a negative impact from foreign currency exchanges and other structural changes, Coke said its revenue was flat.
On a global basis, the Atlanta-based company said total sales volume was flat. That reflected a 1 percent decline in sodas, and a 3 percent increase for the category including water, enhanced water and sports drinks. Volume rose 2 percent in the category including tea and coffee.
In North America, volume rose for Fanta, Sprite and Coke Zero, while Diet Coke continued to decline.
For the first three months of the year, the company earned $1.18 billion, or 27 cents per share. Excluding one-time gains and costs, it said it earned 43 cents per share, a penny less than analysts expected, according to Zacks Investment Research.
Total revenue was $9.12 billion in the period, topping analyst forecasts for $8.96 billion.
Shares rose slightly in early trading today.