Strong Dollar Taking The Fizz Out of Coca Cola Profits

Coca Cola

had a Modeling Call last night, and discussed the currency impact on EPS. Since Coca Cola operates in over 200 countries and generates 75 percent of its sales from international markets, the strong dollar effectively reduces foreign revenues, translating into lower EPS. The US Dollar Index

is up nearly 10 percent year to date, with the 7 percent rise in the third quarter marking the biggest quarterly increase since the Financial Crisis in 2008. Some of the notable highlights from the Call: -Coca Cola expects EPS growth of 4 to 5 percent, with a currency headwind of 7 percent -The impact of currency in the fourth quarter is expected to be a 6 to 7 point headwind on operating income and a 9 point headwind on EPS -Based on spot rates and existing hedge positions, the Company now expects a 5 to 6 point currency headwind on profit before tax in 2015 Shares of KO are trading lower by 1.65 percent at 39.90.