ATLANTA, U.S. – The Coca-Cola Company today reported strong operating results in the second quarter of 2019, driven by consumer-centric innovation, solid core brand performance and improved execution in the marketplace. Reported net revenues and organic revenues (non-GAAP) both grew 6% through balanced volume and price/mix, with all operating segments contributing to organic revenue (non-GAAP) growth. The company continued to gain global value share. The company’s performance year-to-date led to an update in full year guidance.
“Our strategy to transform as a total beverage company has allowed us to continue to win in a growing and vibrant industry,” said James Quincey, chairman and CEO of The Coca-Cola Company. “Our progress is positioning the company to create more value for all of our stakeholders, including our shareowners.”
Quarterly Performance
- Revenues: Net revenues grew 6% to $10.0 billion. Organic revenues (non-GAAP) grew 6%. Revenue growth was driven by concentrate sales growth of 4% and price/mix growth of 2%.
- Margin: Operating margin, which included items impacting comparability, was 29.9% versus 29.4% in the prior year. Comparable operating margin (non-GAAP) was 30.3% versus 30.6% in the prior year. Strong underlying operating margin (non-GAAP) expansion was offset by an approximate 185 basis point negative impact from currency headwinds and net acquisitions.
- Earnings per share: EPS grew 12% to $0.61. Comparable EPS (non-GAAP) grew 4% to $0.63. Comparable EPS growth included the impact from a 9-point currency headwind.
- Market share: The company continued to gain value share in total nonalcoholic ready-to-drink (NARTD) beverages.
- Cash flow: Year-to-date cash from operations was $4.5 billion, up 68% largely due to strong underlying growth, working capital initiatives and the timing of tax payments. Year-to-date free cash flow (non-GAAP) was $3.7 billion, up 87%.
Driving sparkling
Strong performance for the quarter was driven by sparkling soft drinks, led by 4% volume and transaction growth in trademark Coca-Cola. Coca-Cola Zero Sugar continues to perform well, with a seventh consecutive quarter of double-digit volume growth globally. Quarterly performance was further driven by innovation, such as Coca-Cola Plus Coffee, and a modernized marketing strategy for today’s consumers. The company reached a first-of-its-kind partnership with Netflix to temporarily bring back 1985’s New Coke for the July 4 debut of season 3 of the hit series “Stranger Things.”
Growing coffee
During the quarter, the company launched the first-ever Costa Coffee ready-to-drink (RTD) chilled product in Great Britain, marking the first major introduction since Coca-Cola acquired Costa earlier this year. The company plans to roll out the product in additional markets in the second half of the year. The brand delivers an authentic coffee taste experience with 30% less sugar than most RTD coffees in Costa’s core market of Great Britain. The Costa Coffee brand is also expanding through a new agreement with Coca-Cola HBC AG. The agreement will address a broad range of consumer and customer needs across multiple channels and occasions, including roast and ground coffee, RTD offerings and vending. The bottler plans to introduce Costa Coffee in at least 10 markets in 2020.
