Coca-Cola axing up to 1800 jobs in costs push

DOW JONES
JANUARY 09, 2015

COCA-Cola Co. is axing at least 1600 white-collar jobs globally as part of a cost-cutting push in response to sluggish sales.
The world’s largest beverage company could slim further as it refranchises bottling and distribution businesses that employ about 90 per cent of its roughly 130,000 workers.
Coke confirmed it began notifying some of the affected staff overnight (AEDT) and estimated it will eliminate 1600 to 1800 non-bottling and non-distribution jobs in the coming months. About 500 positions will be cut in Atlanta, where it has its headquarters.
The lay-offs are part of a $US3 billion cost-cutting drive Coke announced in October, when the maker of Sprite, Minute Maid and Powerade warned it would miss profit targets after sales slowed across much of the world. Coke sells its products, including its namesake cola, in every country except Cuba and North Korea.
The Wall Street Journal reported last month that Coke planned to start cutting at least 1000 to 2000 jobs in early January after investors criticised the company for not slashing costs quickly enough. Chief Executive Muhtar Kent has acknowledged the company needs to become faster and leaner.
The company is eliminating the bureaucratic layer of regional groups based in Hong Kong, Istanbul, London, Mexico City and Atlanta so that country units work directly with corporate headquarters, according to people familiar with the restructuring.
It also is standardising operations across business units and introducing zero-based budgeting, requiring managers to justify all expenditures each year instead of rolling over some items. It expects to complete the $US3 billion cost-cutting plan by 2019.
Joseph Agnese, an equity analyst at S & P Capital IQ, called the announcement “a good first step” but predicted there will be more job cuts. “I don’t think they’re done,” said Mr Agnese, who has a “hold” recommendation on Coke shares.
A Coke spokeswoman wouldn’t rule out more lay-offs at a later date, adding the company is “looking continuously for ways to streamline the business.”
Coke’s share price was up 1.1 per cent, or US45 cents, at $US43.44 in afternoon trade on the New York Stock Exchange.
The company said in October it would accelerate the refranchising of its US distribution, a low-margin, capital-intensive business, divesting more than half by 2017. Coke’s North American bottling and distribution unit employs nearly 70,000.
It also is looking to shed bottling and distribution assets it holds overseas, including in Germany. Nearly 50,000 work in bottling and distribution outside North America.
The restructuring drive is the biggest at Coke since 2000, when it slashed more than 5000 jobs.
A spokeswoman said all employees affected by this round of cuts will receive “strong transition assistance,” such as severance and outplacement services.
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