KO Coca Cola Company

By Mike Esterl 

Coca-Cola Co. is scheduled to announce its fourth-quarter earnings before the market opens Tuesday.

Here's what you need to know:

EARNINGS FORECAST: Net income of 37 cents is the consensus of analysts surveyed by Thomson Reuters, down from 44 cents a year earlier. The company estimated in November that foreign currencies would have negative impacts of 7 percentage points on revenue and 13 percentage points on operating income in the fourth quarter.

REVENUE FORECAST: Revenue of $9.91 billion is forecast, compared with $10.87 billion a year earlier.

WHAT TO WATCH:

FOREIGN VS DOMESTIC: Coke is expected to show solid results in the U.S., where the company has been able to raise prices and steer consumers to smaller packages that cost more per ounce. But overseas markets are a big drag, with key countries such as Russia and Brazil in recession, consumer demand weak in Europe and Japan, and China's economy slowing. Weakening foreign currencies also are hitting Coke, which generates about half its sales abroad but translates results into dollars.

2016 GUIDANCE: Coke CEO Muhtar Kent said 2015 would be a transition year before the company returns to mid-single-digit revenue growth and high-single-digit earnings per share growth. But it is unclear if Coke can bounce back in 2016 amid continued overseas economic and political turbulence. J.P. Morgan recently lowered its 2016 adjusted EPS estimate to $1.96 from $2.05, below its $1.99 estimate for 2015.

COST-CUTTING: Investors expect an update on Coke's cost-cutting program, which was launched in late 2014 and aims to deliver $3 billion in annual savings by 2019. The company is reinvesting some of those savings in stepped-up marketing to lure back consumers who avoid sugary drinks for health reasons. Coke also recently accelerated its plan to divest U.S. distribution assets as it focuses on its more profitable concentrate business.

Write to Mike Esterl at mike.esterl@wsj.com

(END) Dow Jones Newswires

February 08, 2016 12:59 ET (17:59 GMT)

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