Earnings Cheat Sheet: Coke Posts Solid Results

The Coca-Cola Company (KO) is the world’s largest beverage company, with more than 500 sparkling and still brands. Primary brands include Coke, Diet Coke, Sprite, Fanta, Powerade, and Vitamin Water.

KO reported strong results today, exceeding all long-term growth targets it has established. The Company increased global share in both sparkling and still beverages.

Worldwide volume growth was 5% in the quarter.

Currency neutral revenues grew 5% in the quarter, to $8.4bn.

Non-GAAP EPS was up 12% to $.92.


North America – grew volume 2%. This was the second positive quarter in a row. Net revenues grew 2%, and with tight expense management and some positive pricing, operating income increased 14% on a currency neutral basis. Sparkling beverages were flat for the quarter, with Coke Zero standing out with double digit growth for the 18th consecutive quarter. Still beverages grew 8%, with 32% growth in Powerade.

Europe – volume was basically flat. The Company is feeling the impact of the economy, specifically in South and Eastern Europe. As a result, revenues and operating income were essentially flat. On a positive note, both France and the Nordic region showed mid single digit growth in volume.

Pacific – – grew volume 11% in the quarter. Revenues grew 14% on a currency neutral basis, with operating income growing 26%. China grew volume 12% in the quarter, with strong growth in Japan, Philippines and Korea as well. Management specifically called-out Japan, remaining cautious on the economic and demographic headwinds.

Latin America – -grew volume 4% in the quarter. Although this appeared light at first glance, management seemed pleased with this growth given adverse weather conditions in Mexico. Revenues grew 4% and operating income grew 16% given strong pricing and a focus on expenses.

Eurasia and Africa – grew volume 12% in the quarter. Revenues grew 14% and operating income 19%. Management specifically called out Russia, where volumes grew 30% and Coca-Cola brand continued to accelerate. India, despite record rainfall, achieved its 17th consecutive quarter of volume growth.

The other highlight in the quarter was the closing of the Coca-Cola Enterprises (CCE) transaction on the last day of the quarter. Management reiterated it was on track to generate synergies of at least $350mm over the next four years.

Due to the closing of this transaction, there was no share repurchase activity in the quarter. However, management said they are reinstating share repurchases now that the transaction has closed, and expects to do $2bn by the end of 2010.

Disclosure: Position in KO.