Outlook overshadows strong quarter at Coca-Cola

ATLANTA (AP) -- A weak annual outlook from Coca-Cola overshadowed solid quarterly results Thursday, wiping out its stock gains for the year and setting off the worst sell-off of company shares in more than a decade.

Coke expects organic revenue growth of 4 percent in 2019, a point lower than last year.

CEO James Quincey said higher tax rates, currency fluctuations and volatility in emerging markets will all be headwinds in 2019.

"Consumers are under more pressure as we head into the new year," Quincey said in a conference call with analysts.

The report landed just before the U.S. Commerce Department published a report on retail sales showing the worst monthly decline since September 2009.

Coca-Cola forecast 2019 per-share earnings growth between negative 1 percent and positive 1 percent compared with 2018.

That implies full-year 2019 earnings of $2.06 to $2.10 per share, according to Bernstein analyst Ali Dibadj. That would be far short of the $2.22 Wall Street had expected, according to analysts polled by FactSet.

Quincey believes Coke could still see an upside, noting stronger-than-expected sales in China and Brazil to start the year.

While disappointed in the outlook for 2019, Wells Fargo analyst Bonnie Herzog stuck to her "outperform" rating and said the company's long-term outlook is robust. She cited ongoing efforts to revitalize Coke's lineup of drinks and changes in bottling agreements.

This month, the company launched Orange Vanilla Coke and Orange Vanilla Coke Zero Sugar in the U.S., the first alteration of its flagship brand in 11 years.

Coca-Cola is also becoming a big player in the coffee market with its 2018 purchase of U.K. brand Costa Limited, the largest acquisition ever by the company.

The company has energized sales with new drinks like Fuze tea and Smartwater. Coca-Cola Zero Sugar, which was introduced in 2017, had strong growth in Europe and North America in the fourth quarter.

Sales of tea and coffee rose 3 percent in the quarter, driven by new product launches in Japan and China. Sales of water and sports drinks rose 1 percent.

But sales of sparkling soft drinks fell 1 percent, partly due to softness in North America after Coke raised prices over the summer. Sales of juice and plant-based drinks dropped 2 percent as Coke focused less on low-value juice brands in Africa and Southeast Asia.

For the fourth quarter, Coke reported net income of $870 million, or 20 cents per share. Per-share earnings were 43 cents when adjusted for one-time costs and gains. Revenue of $7.06 billion. Both matched Wall Street projections, according to a survey by Zacks Investment Research.

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Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on KO at https://www.zacks.com/ap/KO