MILAN – The Coca-Cola Company on Thursday reported quarterly results beating expectation and achieving or exceeding all guidance for the full year 2019. The Atlanta-based company said fourth-quarter revenue growth was led by its trademark Coca-Cola that included products such as caffeinated beverage Plus Coffee and Zero Sugar soda.
Sports drinks and “enhanced” water also helped to send Coca-Cola’s fourth-quarter results exceed Wall Street’s sales forecast.
Coca-Cola, valued at $252 billion, is the world’s largest drinks company with more than 500 brands in 200 countries, including Dasani water and Fuze tea. In 2018, Coca-Cola bought Costa, the British coffee shop chain, from Whitbread for £3.9 billion.
The company has been pushing into flavoured sodas, coffees, teas and low-sugar beverages to attract consumers who move away from sugary drinks.
It is also expanding its portfolio and bought dairy company Fairlife earlier this month after spending about $5 billion to buy Costa Coffee last year.
Retail sales of its flagship brand rose 6%, James Quincey, chairman and CEO of The Coca-Cola Company said, adding that volumes in the brand were positive for the second straight year.
Volumes, a key indicator of demand, grew 3%, spurred by its Coca-Cola soda, with growth across all geographies. Volumes grew 4% for teas and coffee and 3% for sparkling soft drinks.
For the year, Coca-Cola expects to record adjusted profit of $2.25 per share.
Excluding one-time items, Coca-Cola earned 44 cents per share in the fourth quarter ended Dec. 31, meeting Wall Street expectations.
Net revenue grew 16% to $9.07 billion, beating analysts’ estimate of $8.89 billion.
Net income attributable to the company’s shareholders rose to $2.04 billion, or 47 cents per share, in the fourth quarter ended Dec. 31, from $870 million, or 20 cents per share, a year earlier.
“We made good progress in 2019 by delivering on our financial commitments and growing in a more sustainable way,” Quincey said. “We continue to transform the organization to act with a growth mindset, which gives us confidence in our 2020 targets and our ability to create a better shared future for all of our stakeholders.”
Coca-Cola Quarterly / Full Year Performance
Revenues: Net revenues grew 16% to $9.1 billion for the quarter and 9% to $37.3 billion for the year. Organic revenues (non-GAAP) grew 7% for the quarter and 6% for the year. Revenue growth for the quarter was driven by concentrate sales growth of 2% and price/mix growth of 5%. The quarter included one additional day, which resulted in an approximate 1-point benefit to revenue growth. Revenue growth for the year was driven by concentrate sales growth of 1% and price/mix growth of 5%. Reported net revenues in the quarter benefited from the Costa acquisition.
Margin: For the quarter, operating margin, which included items impacting comparability, was 23.9% versus 23.4% in the prior year, while comparable operating margin (non-GAAP) was 24.8% in both the current and prior year. For the year, operating margin, which included items impacting comparability, was 27.1% versus 26.7% in the prior year. Comparable operating margin (non-GAAP) was 27.9% versus 28.8% in the prior year. For both the quarter and full year, strong underlying margin expansion was more than offset by headwinds from currency and net acquisitions.
Earnings per share: For the quarter, EPS grew 134% to $0.47, and comparable EPS (non-GAAP) grew 1% to $0.44. For the year, EPS grew 38% to $2.07, and comparable EPS (non-GAAP) grew 1% to $2.11. Both fourth quarter and full year comparable EPS (non-GAAP) performance included the impact of an 8-point currency headwind.
Market share: The company continued to gain value share in total nonalcoholic ready-to-drink (NARTD) beverages.
Cash flow: Cash from operations was $10.5 billion for the year, up 37% largely due to strong underlying growth, accelerated timing of working capital initiatives and the reduction of productivity and restructuring costs. Full year free cash flow (non-GAAP) was $8.4 billion, up 38%.
Company Updates
In 2019, the company continued to grow its total portfolio, which led to the largest value share gains in almost a decade, with contribution from both sparkling and non-sparkling offerings. In sparkling, trademark Coca-Cola grew 6% retail value globally as it continued to scale innovative offerings such as Coca-Cola Plus Coffee, now available in more than 40 markets.
Coca-Cola Zero Sugar continued to expand its footprint, achieving another year of double-digit volume growth. In the non-sparkling portfolio, innocent, one of the company’s juice and smoothie brands, continued to perform well led by innovative products such as innocent plus, a premium juice offering with added vitamins. The innocent brand scaled beyond its flagship market of Europe, launching in Japan during 2019 with more expansion planned in 2020.
