Coca-Cola’s (KO) first quarter earnings dropped by 20% amid a double-digit sales decline and high than expected costs relating to the restructuring of its bottling operations.

Net Income attributable to shareholders fell from US$1.48bn in the first quarter of 2017 to US$1.18bn.

Profits were hit by a $84m charge relating to the refranchising of its North American bottling operations, while the company recorded another charge of $139m during the quarter relating to its productivity and reinvestment initiatives.

This productivity investment is now expected to generate an incremental $800m in annual savings by 2019, bringing the total annualized savings target of its six-year program to $3.8bn.

Coca-Cola also adjusted full-year earnings expectations marginally upwards, guiding towards a full-year adjusted profit decline of 1-3% compared with to the previous 1-4% forecasted decline.

Group revenues declined 11% to $9.1bn – 10% of which is related to the ongoing refranchising of bottling territories and 1% due to foreign currency exchange headwinds.

Organic sales were even – the result of 3% price/mix growth and a 3% decline in concentrate sales. Coca-Cola said the timing of concentrate shipments and the shift of the Easter holiday into the second quarter put negative pressure on the results.

Unit case volumes were even, with sparkling soft drinks down 1%, juice, dairy, and plant-based beverages flat, 3% growth in waters and sports drinks and 2% growth in tea and coffee.

Volumes were up 2% in Europe, Middle East & Africa, flat in North America, down 3% in Latin America and up 1% in Asia Pacific.

Outgoing CEO Muhtar Kent commented: “The first quarter performance was in line with our plan, and we remain on track to deliver our underlying revenue and profit targets for the full year.

“Most importantly, we continue to execute against the long-term strategic transformation plan for the Company – a plan that I am confident will deliver even greater shareowner and stakeholder value in the years to come.”

He hands over to new CEO and currency chief operating officer James Quincey next week.

Quincey commented: “We are rapidly evolving our growth model to make changes that will result in an even more consumer-centric portfolio that meets people’s changing tastes and preferences.

“Importantly, these portfolio changes will help our consumers moderate the amount of added sugar they consume. In addition, as we approach the end of our refranchising and implement our new, more agile operating model, we are expanding our productivity program.

“Our revamped portfolio, a stronger global bottling system, and a leaner enterprise structure will allow us to capture an increasing share of the vibrant value growth available in the beverage industry and to deliver value for our shareowners.”

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