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U.S. Business Coca-Cola tops sales estimates on higher Diet Coke demand

A can of Diet Coke is displayed in a cooler on June 29, 2018 in San Francisco, Calif.

Justin Sullivan/Getty Images

Coca-Cola Co topped Wall Street estimates for quarterly sales and profit on Wednesday, as more consumers bought its healthier soda options such as Zero Sugar and new flavours of Diet Coke, sending its shares up 2.7 per cent.

Coke and its smaller rival PepsiCo Inc have been focusing on healthier drinks to garner market share as health-conscious consumers shift away from sugary sodas.

The company has launched new flavours of Diet Coke in slimmer packaging and in the quarter introduced no-sugar beverages in smaller markets such as New Zealand.

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“We’re winning in the marketplace so far this year and our strategy’s on track,” Chief Executive Officer James Quincey said on a call with analysts.

Organic revenue, or sales from its core beverage business, rose 5 per cent in the quarter, with Diet Coke, Coke Zero and sparkling water contributing the most.

Volumes, a key indicator of demand, grew 2 per cent on strong performance of its trademark Coca-Cola brand, and Fuze Tea. Global volume grew 3 per cent, its strongest in five years.

“We’re getting strong first half overall revenue growth and volume growth with our Zero, Diet portfolio in the U.S., which is a part of our strategy to go forward. So good numbers, much better than before,” Quincey said.

Organic sales in Europe rose 7 per cent after the company reformulated its recipe for a few sodas in response to U.K’s tax on sugar.

“We were impressed with Coca-Cola’s ability to deliver a strong and balanced topline,” Wells Fargo analyst Bonnie Herzog wrote in a note.

Sales in North America – its biggest revenue generating region – rose 7 per cent to $3.12 billion, but missed analysts’ average estimate of $3.14 billion, mainly due to weaker demand for juices and plant- based beverages.

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Net income attributable to the company’s shareholders rose 69 per cent to $2.32 billion, in the second quarter ended June 29.

Excluding one-time items, Coca-Cola said it earned 61 cents per share, beating analysts’ average estimate by a cent.

Revenue fell 8 per cent to $8.93 billion, hurt by the divestiture of its low-margin bottling operations. Analysts had estimated sales of $8.54 billion.

Coca-Cola reaffirmed its 2018 profit outlook and said it expects full-year organic revenue to be at least 4 per cent.

The company’s shares were up at $46.49 in morning trading.

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