LONDON: The somber forecast undid an initial rise in shares of the world’s biggest drinks maker after it topped forecasts for revenue and profit, helped by a reboot of its Diet Coke brand that has introduced new flavors and cans.
The company said it had reformulated recipes and launched smaller packaging to ensure that two-thirds of its major brands would not be subject to the new tax, but Coca-Cola Classic, its top-selling U.K. brand, will still face the levy, which kicked in on April 6.
Company executives during a post-earnings call also cautioned that rising freight costs in North America, up 20 percent from a year earlier, would reduce revenue in the first half of the year.
“People assumed that Coke sold to bottlers, and so some didn’t realize how much exposure the company has on freight,” said Brittany Weissman, a consumer analyst with Edward Jones. “But they do distribute and are affected.”
U.S. packaged goods companies, already struggling with lower demand and price tensions with retailers, have recently begun flagging higher commodities and transportation costs.
