Coke warns of pain from UK revenue

NEW YORK, Apr 25 (Reuters): Coca-Cola Co said on Tuesday it would take a hit in the second quarter from the introduction of a British sugar tax on soft drinks and rising freight costs in the United States, overshadowing modestly better than forecast results for the first three months of 2018.

The somber forecast undid an initial rise in shares of the world's biggest drinks maker after it topped forecasts for revenue and profit, helped by a reboot of its Diet Coke brand that has introduced new flavors and cans.

The company said it had reformulated recipes and launched smaller packaging to ensure that two-thirds of its major brands would not be subject to the new tax, but Coca-Cola Classic, its top-selling UK brand, will still face the levy, which kicked in on April 6. Company executives during a post-earnings call also cautioned that rising freight costs in North America, up 20 per cent from a year earlier, would reduce revenue in the first half of the year.