Coca-Cola Q1 Results Beat Estimates

29-Apr-2015 - USA

beverages giant Coca-Cola Co. (KO) on Wednesday reported a 4 percent decline in profit for the first quarter from last year as slightly higher revenues and volumes were offset by foreign-exchange headwinds and costs aimed at improving productivity. However, results for the quarter beat analysts' expectations.


Coca-Cola also announced additional letter of intent with U.S. bottling partners, noting that it was a significant step toward refranchising half of company-owned U.S. bottler-delivered volume by the end of 2017. 

Muhtar Kent, chairman and CEO of Coca-Cola said, "Though we are still in the early stages, we see some initial positive indicators that we have the right strategies in place to accelerate growth. However, we continue to view 2015 as a transition year as the benefits from the announced initiatives will take time to fully materialize amidst an uncertain and volatile macroeconomic environment." 

The Atlanta, Georgia-based company's net income for the first quarter was $1.56 billion or $0.35 per share, down from $1.62 billion or $0.36 per share in the prior-year quarter. 

Items impacting comparability reduced reported earnings by a net $0.13 per share, primarily related to the early extinguishment of certain long-term debt, costs associated with the previously-announced productivity program, and charges related to its Venezuelan operation. 

Excluding these items, comparable net income for the quarter was $2.10 billion or $0.48 per share, compared to $1.95 billion or $0.44 per share in the year-ago quarter. 

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.42 per share for the quarter.

Analysts' estimates typically exclude special items. The company noted that fluctuations in foreign currency exchange rates resulted in a 6 point headwind on earnings per share. 

Net operating revenues for the quarter edged up 1 percent to $10.71 billion from $10.58 billion in the same quarter last year, and beat analysts' consensus estimate of $10.66 billion. 

Organic revenue grew 8 percent, driven by concentrate sales growth and 3 points of positive price/mix. 

Eurasia & Africa net operating revenues declined 3 percent, Europe revenues decreased 6 percent and Asia Pacific revenues were down 2 percent from last year. In addition, Latin American revenues declined 4 percent, while North American revenues rose 6 percent from last year. Bottling investments revenues remained flat with last year.

The company noted that worldwide volumes in the quarter grew 1 percent. Worldwide sparkling beverages volume grew 1 percent. Worldwide brand Coca-Cola volume rose 1 percent, while Coke Zero recorded 5 percent growth. Sprite and Fanta grew 4 percent and 3 percent respectively. Growth in these brands was partially offset by a 6 percent decline in Diet Coke. Worldwide still beverage volume also grew 1 percent, reflecting growth in ready-to-drink tea, value-added dairy and packaged water.

The company gained global value share in non-alcoholic ready-to-drink beverages. 

Looking ahead to fiscal 2015, Coca-Cola expects full-year comparable currency neutral earnings per share growth in mid-single digits, roughly in line with its growth rate in 2014. 

The company said that the net impact of structural items on full-year 2015 results will be a slight headwind on net revenue growth. Street expects the company to earn $1.98 per share for the year on revenues of $45.21 billion. The company is targeting full-year 2015 net share repurchases of $2 billion to $3 billion. 

In a separate statement, Coca-Cola announced additional letters of intent with U.S. bottling partners as part of steps towards the "implementation of a 21st Century Beverage Partnership Model" in the U.S. 

Coca-Cola has agreed in principle with three U.S. bottlers to continue granting new, expanded territories. These bottlers are Coca-Cola Bottling Co. High Country, Coca-Cola Bottling Co. United and Swire Coca-Cola USA.

Further, Coca-Cola Company has agreed in principle to the granting of expanded territories to four new expanding U.S. bottlers. These bottlers are Atlantic Coca-Cola Bottling Co, Chesterman Co., Odom Corp. and Ozarks Coca-Cola Bottling Co.  KO closed Tuesday's trading at $40.78. In Wednesday's pre-market activity, the stock is up $0.96 or 2.35 percent to $41.74.(dpa)

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