Monster Beverage Sales Growth Slows -- Update
November 03 2016 - 7:45PM
Dow Jones News
By Mike Esterl and Anne Steele
Monster Beverage Corp. on Thursday said sales growth slowed
sharply in the third quarter, weighed down by a transition to using
Coca-Cola Co. distributors for its products, before speeding up
again in October.
Revenue at the energy drink maker rose 4.1% to $788.0 million in
the three months ended Sept. 30 from a year earlier, far weaker
than the 14% growth in the first half of the year.
But Monster said sales bounced back in October, rising 12%,
including 10% growth in the U.S., its main market.
Coca-Cola acquired a 16.7% stake in the Corona, Calif. company
in June 2015 as part of an asset swap in which it also became
Monster's preferred distributor. That move should accelerate
Monster's overseas expansion but has caused uneven results in the
near term amid sometimes rocky handovers from longtime
distributors.
Monster said third-quarter results also were hurt by weaker
foreign currencies and advance purchases by retailers in the
year-earlier period ahead of price increases.
The latest sales slowdown renews questions about whether the
years of rapid revenue growth at energy drink makers such as
Monster could become a thing of the past. "We do believe we'll see
an increase in growth rates next year, but we don't have any
crystal ball," Chief Executive Rodney Sacks told analysts on an
earnings conference call.
Monster's share price, down 5.9% this year, fell another 6.5% to
$131.12 in after-hours trading.
Mr. Sacks said distribution continues to improve in the U.S., as
the company also increasingly shifts distribution to Coca-Cola
bottlers overseas.
Monster launched its namesake energy drink in Beijing in
September and Shanghai in October, part of a broader launch across
major Chinese cities in the coming months. Distribution shifted to
Coke partners in Mexico and South Africa in the third quarter. Coke
bottlers also took the reins in Turkey and Brazil in recent
weeks.
In the September quarter, the company earned $191.6 million, or
99 cents a share, up from $174.6 million, or 84 cents a share, a
year earlier.
The company said unfavorable currency exchange rates hit sales
by about $2.6 million during the quarter.
Analysts polled by Thomson Reuters had projected adjusted profit
of $1.12 a share on $818.8 million in revenue.
Gross margin improved to 63.8% from 61.5% a year ago.
Write to Mike Esterl at mike.esterl@wsj.com and Anne Steele at
Anne.Steele@wsj.com
(END) Dow Jones Newswires
November 03, 2016 19:30 ET (23:30 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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