The junk food industry does not bag that many billions anymore: on the tables of people that are becoming more health-conscious around the world, salads and healthy foods replace burgers and fries. Sodas and sugary drinks get superseded by water or healthier drinks. A trend in place for some time that is felt in all its force, the accounts of giants like McDonald’s and Coca-Cola, which are losing ground also in the face of a more fierce competition.
And run for cover: Coca-Cola announces a ‘slimming’ cure with cuts to the cost of $3 billion by 2019 and McDonald’s is committed to substantial changes to its activities to improve the customer experience. ”Our performance is below our expectations”, bluntly states the CEO of McDonald’s, Don Thompson, noting that the “internal and external headwinds proved to be stronger than expected and will continue in fourth quarter. These significant challenges require significant changes,” highlights Thompson. The net profit for McDonald’s declined in the third quarter by 30 percent – the biggest fall, according to some estimates, since 2007 – to $1.07 billion on revenues that declined 5 percent to $6.99 billion. The giant hamburger maker was affected by the reduction in sales in China after the scandal that engulfed one of its suppliers of meat and the slowdown in Russia and the United States, where it fails to win the younger people and strengthen their menu. ”We have to show our consumers that we understand the problems that we face and that we are taking measures to radically change our approach,” adds Thompson.
The growing awareness of the problem of obesity and the growing opposition to sodas deemed partly responsible for the phenomenon, also weigh on Coca Cola. The third quarter ended with a net profit down 14 percent to 2.11 billion dollars on revenues down to $11.98 billion. Coca Cola closed the third quarter with a net profit that fell short of expectations and announced new measures to reduce costs in the face of a decline in volumes of carbonated beverages in North America.
”We looked at the progress made and realized that the scope and the speed of our actions, based on the strategies outlined at the beginning of the year should accelerate,” says the CEO of Coca-Cola, Muhtar Kent. Warning about the possibility that the financial targets may not be achieved, Coca-Cola announced a plan to cut costs by $3 billion a year by 2019, a figure higher than $1 billion per year plan announced in three-year unveiled last February.
The net profit of the biggest beverage producer in the world stood at $2.1 billion, equal to $0.48 per share, below Thomson Reuters I / B / E / S expectations, which estimated an eps of $0.53.
The company confirms the target “high single digit” earnings per share over the long term but remains cautious in the short term since the difficult macroeconomic environment. In particular, Coca Cola believes it is not able to achieve the goals of long-term EPS growth for the year 2014.