Coca-Cola Beats Profits, says demand in March hit pre-pandemic levels
Coca-Cola reported Monday that quarterly demand was flat from last year as North America and Western Europe take longer to recover from the coronavirus pandemic.
However, the global case volume in March returned to 2019 levels.
“We are encouraged to see improvements in our business, particularly in markets where vaccine availability is increasing and the economy is opening, and we remain confident in our full-year guidance,” CEO James Quincey said in a statement.
The company’s shares closed less than 1% at $ 54.00 on Monday.
The company reported, relative to Wall Street expectations based on an analyst survey by Refinitiv:
- Earnings per share: 55 cents adjusted compared to 50 cents expected
- Revenue: $ 9.02 billion versus $ 8.6 billion expected
The beverage giant reported net income of $ 2.25 billion, or 52 cents per share, for the first quarter, compared to $ 2.78 billion, or 64 cents per share, a year earlier.
Excluding items, Coke earned 55 cents per share, beating the analysts surveyed by Refinitiv, 50 cents per share.
Net sales rose 5% to $ 9.02 billion, beating expectations of $ 8.6 billion. Organic sales increased by 6%, while the unit volume remained unchanged compared to the previous year. Coke said demand has improved every month of the quarter, thanks to markets like China, where uncertainty associated with the virus has decreased.
The company’s sparkling soft drinks segment, which also includes soda of the same name, posted 4% volume growth for the quarter. While the North American wells business is still under pressure, growth in India, China and Latin America offset these declines. The higher demand in China and India also contributed to the nutrition, juice, dairy and plant-based beverages segment, which saw volume growth of 3%.
Coke’s hydration, sports, coffee, and tea segments were hardest hit with a volume decline of 11%. The coffee business was down 21% due to the virus’ impact on Costa cafes. The drink category, which includes Dasani and Smartwater, saw a 12% drop in volume as fewer consumers around the world bought single-use bottles of water. Demand for cola tea products fell 6%, while sports drinks such as Powerade only fell 1% in volume.
The company reiterated its guidance for the full year of organic sales growth in the high single digits and adjusted earnings growth in the high single digits to low double digits.
CFO John Murphy told analysts the uncertainty persists. India and parts of Europe are responding to spikes in new Covid-19 cases with lockdowns, while Latin America and Africa await slower vaccine distribution and new waves. Quincey repeated that feeling.
“The current news today is that weekly new cases of Covid have hit an all-time high. While vaccinations are increasing in many countries – US, UK etc – the downside is that there is actually a new high in terms of cases” Said Quincey.
He added that April got off to a good start for Coke, but the looming risk of new bans could reverse that progress.
In a separate filing, Coke announced plans to publicly list Coca-Cola Beverages Africa. The company will sell part of its holdings in the IPO, which is expected within 18 months. The shares are listed in Amsterdam and Johannesburg.