With a new chief executive at the helm, Coca-Cola on Wednesday reported earnings and revenue that topped analysts' expectations. The beverage maker also issued a more upbeat earnings forecast for the full year.
Increasingly, shoppers are searching for Coke's healthier options — low in sugar and free of carbonation — which fueled these results, though Coca-Cola posted another drop in profit as it's still in the midst of completing a refranchising plan.
Coca-Cola shares initially jumped 1.5 percent in premarket trading before reversing course and falling modestly.
Coke is divesting from its U.S. cold-fill bottling operations, with a self-imposed deadline to finish the reorganization by the end of the year. The company had warned earlier that its 2017 profit would drop as a result of these efforts.
In the second quarter alone, the beverage maker incurred a charge of $653 million related to refranchising.
Here's what the company reported versus what Wall Street was expecting:
"Our second quarter results demonstrate continued progress against the strategic priorities we have laid out to accelerate the transformation of our business into a total beverage company with balanced growth across a consumer-centric portfolio," new CEO James Quincey said in a statement.
Former Coca-Cola CEO Muhtar Kent stepped down in May and was succeeded by Quincey, who had previously been the company's chief operating officer. The second quarter marks Quincey's first earnings report as chief executive.
"Not only did we see strong performance during the quarter in rapidly expanding areas of our Company, such as our innocent juice and smoothie business in Europe, our organic revenue growth in sparkling soft drinks was led by innovation in and marketing support for our low- and no-sugar options like Coca-Cola Zero Sugar, which continues to roll out around the world," Quincey said.
Coca-Cola's net revenue for the quarter fell 16 percent to $9.7 billion. The Atlanta-based beverage giant said sales were hurt by unfavorable foreign currency exchange.
Macroeconomic challenges have been one concern for the company and many of its peers, including PepsiCo, of late.
Coca-Cola's net income fell to $1.37 billion, or 32 cents per share not adjusted, in the second quarter, from $3.45 billion, or 79 cents per share, a year earlier.
"Within the [macroeconomic] backdrop we're in today, I think Coke's results are actually promising," RBC Capital Markets analyst Nik Modi told CNBC's "Squawk Box" on Wednesday. "As they refranchise, we're seeing improvement in volume because of better execution."
During the second quarter, Coke said the company made progress in some of its key initiatives, which included transforming the business' beverage portfolio, getting away from sugary drinks and growing in global markets.
Quincey has made it clear he wants to focus on boosting Coca-Cola's sales of smaller-sized packages and no-calorie sparkling beverages to meet the needs of consumers looking for healthier options.
He told CNBC in an interview on Wednesday that Coca-Cola saw "nice results" in juice and dairy during the quarter, adding that the reorganization of the bottlers was going "almost miraculously smooth."
Notably, Coke's unit case volume for juice, dairy and plant-based beverages climbed 3 percent globally. Case volume for Coca-Cola's water, enhanced water and sports drinks category was up 1 percent, while tea and coffee case volume was up 2 percent.
Coca-Cola continues to see headwinds in emerging markets such as Brazil and Venezuela, Quincey added. But developed economies — Europe and North America — are delivering stronger results, he said.
Coke reported on Wednesday that low- and no-calorie sparkling soft drinks grew unit case volume in the mid single digits during the quarter, as the company continues to expand its reduced-sugar offerings globally. Coca-Cola Zero Sugar, for example, will hit the U.S. in August after seeing double-digit growth in Europe, the Middle East and Africa, and Latin America.
Prior to Coca-Cola Zero Sugar, Coke's popular, no-calorie beverage of choice in the U.S. was dubbed Coca-Cola Zero. Coca-Cola Zero Sugar, though, will have a new design and packaging that looks more like Coca-Cola, the company said.
"It is a reinvention of Coke Zero," CEO Quincey said on Wednesday's earnings conference call. "It is part of what we call the one-brand strategy."
Overall, the beverage company's total unit case volume across all segments was even for the latest period.
Looking at the full year ahead, Coca-Cola now expects earnings per share to be flat to a drop of 2 percent, better than a previous forecast for declines of 1 to 3 percent. The company still expects organic revenue to grow about 3 percent — Coca-Cola's full-year performance outlook remains unchanged.
Earnings flat to down 2 percent would imply profit of $1.87 per share to $1.91 per share for the full year, falling in line with Thomson Reuters analysts' consensus of $1.89 per share.
"Our performance gives us confidence that we will achieve our full-year financial objectives even in the face of challenging conditions, and also demonstrates further success in evolving our portfolio to meet changing consumer tastes and preferences," Quincey said in the earnings statement.
In his first go at earnings as CEO, this was a "good quarter out of the gate" for Quincey, Jefferies analyst Kevin Grundy wrote in a note to clients. He added that he's interested to watch the growth in the CEO's favorite "category clusters" in coming quarters — namely the healthier beverages in Coke's portfolio.
And all eyes will be on Coca-Cola Zero Sugar's August launch in the United States.
As of Tuesday's close, shares of Coca-Cola are up less than 1 percent over the past 12 months, but the stock has risen about 9 percent for the year.
— CNBC's Sara Eisen contributed to this report.
Correction: Coca-Cola shares are up less than 1 percent over the past 12 months. An earlier version misstated their move.