Coca-Cola loses fizz in Middle East and Africa as global revenue drops 20%

Coca-Cola The company said “unit case volumes” saw “declines across Africa and the Middle East.” (REUTERS)

LONDON: The red ink flowed at Coca-Cola in the fourth quarter as the ubiquitous US drinks company restructured its operations, took a one-off hefty tax charge and saw volumes fall in the Middle and Africa “due to macroeconomic challenges and strategic pack downsizing initiatives.”
The company said “unit case volumes” saw “declines across Africa and the Middle East.”
The $3.6 billion tax charge was linked to a sweeping overhaul of US tax laws spearheaded by President Donald Trump.
Revenues were down 20 percent to $7.5 billion in the quarter as the company streamlines its operations, selling off or refranchising its bottling operations to transform itself into a beverage-only company — the idea being to tie up less capital going forward.
Coca-Cola said in a statement that while net revenues continued to be impacted by ongoing refranchising initiatives, “the company delivered broad-based organic revenue growth across all operating segments, as well as profit growth.”
Organic sales were 6 percent to the good in the quarter, better than the 3.7 percent Wall Street had forecast.
The company said it had fully refranchised its bottling business in the US. Outside the US, Coca-Cola had refranchised previously owned bottling operations in China to local partners, said the statement.
The multinational said as a result of the Tax Reform Act, Coca- Cola’s effective tax rate for 2018 was now estimated to be 21 percent, reduced from the previously provided estimate of 26 percent.
However, under the Tax Reform Act, the company is required to pay a tax on historical offshore earnings that have not been repatriated to the US. The charge related to this tax is partially offset by the revaluation of the company’s net deferred tax liability position at the new federal statutory tax rate of 21 percent.
Coca-Cola said: “The impact of these items resulted in a one-time net charge of $3.6 billion during the quarter ended Dec. 31, 2017, consisting of a repatriation charge of $4.6 billion and a deferred tax benefit of $1 billion.”
James Quincey, CEO, said: “We achieved or exceeded our full year guidance while driving significant change as we continued to transform into a total beverage company. While there is still much work to do, I am encouraged by our momentum as we head into 2018.”