Investing.com -- The impact of a stronger dollar will likely restrain Coca-Cola's (N:KO) earnings over the fourth quarter, the world's largest beverage company announced on Tuesday, as it continues to search for ways to navigate past formidable currency headwinds.
For the company's final quarter of 2015, Coca-Cola anticipates a seven point currency headwind on net revenues, a 13 point negative impact on operating income and an 11 point negative effect on income before taxes, the company said in a statement. It follows a quarter when Coca-Cola's earnings were crushed by a soaring dollar, as a powerful greenback pushed its operating income down by 12% over the three-month period. Overall, the beverage giant saw its revenues last quarter plummet 5% to $11.4 billion, while its per share earnings tumbled by more than a quarter.
Coca-Cola derives approximately 75% of its revenues from outside the U.S., The Economist reported.
"We are seeing initial results with global price mix accelerating without a corresponding offset to unit case volume growth," Coca-Cola CFO Kathy Waller said during a presentation at Morgan Stanley (N:MS) Global Consumer and Retail Conference. "Due to the macro headwinds impacting all global consumer product companies, it can be difficult to see the top line improvement results from – resulting from our strategies, so that further determines whether our strategies that are working."
The effects of a stronger dollar have weighed heavily on a host of multinational companies over the last year, including Coca-Cola's main rival PepsiCo Inc (N:PEP), which reported a double-digit negative impact from foreign currency translation on its third quarter revenues. While Pepsi indicated that the impact of a weaker Russian ruble could fade in the coming months, it added that it did not expect headwinds from a declining Mexican peso or Brazilian real to recede in the near-term. By the same token Waller has indicated that Coca-Cola is not optimistic that the dollar will weaken appreciably before the end of 2017, at the earliest.
Shares in Coca-Cola closed on Tuesday at 41.66, down 0.30 or 0.71% on the session.