Coca-Cola beats the Street despite refranchising costs

The world's biggest beverage maker, which has been pouring money into a variety of non-carbonated drinks of late, dropped $5.1bn earlier in the year for coffee chain Costa, and also picked up a stake in Los Angeles Lakers' legend Kobe Bryant's new sports drink BodyArmor, in an attempt to reel in a younger and more varied demographic.

In the three months ended 28 September, net revenues declined 9% to $8.2bn as a result of a 13-point headwind from the refranchising of its company-owned bottling operations. Organic revenue improved 6% thanks to double-digit volume growth for Diet Coke and Coca-Cola Zero Sugar products.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “The refranchising of bottling operations in North and South America means Coca-Cola’s numbers are messier than they should be, but look through that and it’s business as usual. Cost savings are being recycled into marketing spend which is, in turn. driving steady, albeit low single-digit, volume growth. Add in a dose of price hikes and the result is a very healthy improvement in profits."

Net income rose 30% to $1.88bn and underlying operating income rose 18% at constant exchange rates to $2.5bn - with an especially strong result from Latin America.

Chief executive James Quincey said the results highlighted Coca-Cola's evolution int "an even more consumer-centric, total beverage company."

Volumes grew 2% as both soft drinks and premium water brands performed well.

Excluding one-time items, Coca-Cola pulled in $0.58 cents per share, topping expectations on the Street of a $0.50 figure.

As of 1500 BST, Coca-Cola shares were up 1.50% at $47.16 per share.