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Coca-Cola Reports First Quarter 2021 Results

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The Coca-Cola Company today reported first quarter 2021 results and provided an update on progress against its strategic initiatives. “We remain focused on emerging stronger and executing against our growth accelerators during the recovery phase. We are pleased with the progress we are making,” said James Quincey, Chairman and CEO of The Coca-Cola Company. “We are encouraged by improvements in our business, especially in markets where vaccine availability is increasing and economies are opening up, and we remain confident in our full year guidance.”

Highlights

Quarterly Performance

  • Revenues: Net revenues grew 5% to $9.0 billion, and organic revenues (non-GAAP) grew 6%. This was driven by 5% growth in concentrate sales, while price/mix grew 1%. The quarter included five additional days, which resulted in an approximate 6-point benefit to revenue growth.
  • Margin: Operating margin, which included items impacting comparability, was 30.2% versus 27.7% in the prior year, while comparable operating margin (non-GAAP) was 31.0% versus 30.7% in the prior year. Operating margin expansion was primarily driven by effective cost management, partially offset by currency headwinds.
  • Earnings per share: EPS declined 19% to $0.52, and comparable EPS (non-GAAP) grew 8% to $0.55. Comparable EPS (non-GAAP) growth included the impact of a 2-point currency headwind.
  • Market share: The company lost value share in total nonalcoholic ready-to-drink (NARTD) beverages as an underlying share gain in both at-home and away-from-home channels was more than offset by negative channel mix due to continued pressure in away-from-home channels, where the company has a strong share position.
  • Cash flow: Cash from operations was $1.6 billion, up $1.1 billion versus the prior year, driven by positive business performance, five additional days in the quarter and working capital initiatives. Free cash flow (non-GAAP) was $1.4 billion, up $1.2 billion versus the prior year, primarily driven by cash from operations along with lower capital expenditures versus the prior year.

Company Updates

  • Business environment update: Global unit case volume trends remain closely linked to consumer mobility, driven by vaccination rates in different markets and related improvements in away-from-home channels. Through the first quarter, volume trends steadily improved each month, driven by recovery in markets where coronavirus-related uncertainty has abated. The path to recovery, however, remains asynchronous around the world. March volume was back to 2019 levels, with growth in at-home channels being offset by pressure in away-from-home channels. Solid growth in Trademark Coca-Cola, sparkling flavors and the nutrition, juice, dairy and plant-based beverages category was offset by pressure in the hydration category during the quarter.
  • Driving consumer-centric innovation through scaled brands: The company launched new products across several categories, leveraging loved brands to drive scale and impact. In the United States, the company launched smartwater®+, a lineup of infused hydration options featuring unique ingredient pairings and flavor extracts tailored for specific wellness occasions. Three smartwater®+ variants – smartwater®+ clarity, smartwater®+ tranquility and smartwater®+ renew – deliver unique hydration experiences and will be supported by a 360-degree marketing campaign. This rollout is the latest addition to the company’s portfolio of premium beverages across key markets. After initial success in international markets, the company launched Coca-Cola® with Coffee and Coca-Cola® with Coffee Zero Sugar in the United States to give consumers a refreshing and reinvigorating reset to their daily routine. This innovation exemplifies the company’s lift-and-shift strategy to scale successful beverage innovations to new markets, with the United States becoming the 50th market to launch the product. Additionally, Topo Chico™ Hard Seltzer continued its expansion in Latin America and Europe and was recently launched in key markets in the United States under an agreement with Molson Coors Beverage Co.
  • Aligned bottling system investing for growth: The company continues to focus on strengthening bottling partnerships and bottler alignment as the system enters the recovery phase. Seamless system connectivity is helping the company maintain local relevance while benefiting from global scale. In line with its objective of focusing its resources on building consumer-loved brands and on innovation, the company announced in a separate Form 8-K filing with the Securities and Exchange Commission today that it plans to list Coca-Cola Beverages Africa (CCBA) as a publicly traded bottler and intends to sell a portion of its holdings in CCBA via an initial public offering. This demonstrates a commitment by the company for CCBA to remain Africa-focused and South Africa-headquartered. For more information, please refer to the press release section of the company’s website.
  • Progress against long-term sustainability goals and creating business value: Environmental, social and governance (ESG) goals remain core to the company’s business and are embedded in its operations. The company delivered on its decade-long drive to enable the economic empowerment of 5 million women entrepreneurs through the 5by20 initiative. The program has reached more than 6 million women entrepreneurs, providing business-skills training, financial services, peer networks, mentoring and other resources. In addition, building on its water stewardship leadership, the company recently announced a holistic strategy to achieve water security where the company operates by 2030. The strategic framework focuses on three priorities: reducing shared water challenges around the world; enhancing community water and sanitation access with a focus on women and girls; and improving the health of priority watersheds. A full update of the company’s ESG priorities will be published April 20 in the 2020 Business & ESG Report, reflecting a continued journey toward driving sustainable business practices.

Operating Review – Three Months Ended April 2, 2021

Revenues and Volume

Percent Change

Concentrate
Sales1

Price/Mix

Currency
Impact

Acquisitions,
Divestitures and
Structural
Changes, Net

Reported Net
Revenues

 

Organic
Revenues2

 

Unit Case
Volume

Consolidated

5

1

(1)

0

5

 

6

 

0

Europe, Middle East & Africa

(2)

(5)

1

0

(6)

 

(7)

 

(2)

Latin America

2

7

(10)

0

(2)

 

8

 

0

North America

0

4

0

(1)

3

 

4

 

(6)

Asia Pacific

20

(2)

6

0

24

 

18

 

9

Global Ventures3

3

(8)

5

0

(1)

 

(5)

 

(3)

Bottling Investments

11

5

(2)

0

14

 

17

 

5

Operating Income and EPS

Percent Change

Reported
Operating
Income

Items
Impacting
Comparability

Currency
Impact

Comparable
Currency
Neutral2

Consolidated

14

8

(1)

7

Europe, Middle East & Africa

(15)

(5)

1

(10)

Latin America

2

(2)

(11)

15

North America

105

80

0

24

Asia Pacific

34

(2)

8

29

Global Ventures

37

(17)

6

48

Bottling Investments

125

51

(17)

91

 

 

 

 

 

Percent Change

Reported EPS

Items
Impacting
Comparability

Currency
Impact

Comparable
Currency
Neutral2

Consolidated EPS

(19)

(27)

(2)

10

Note: Certain rows may not add due to rounding.

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Coca-Cola Company

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Soft Drink Manufacturing
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About KO

The Coca-Cola Company is an American multinational corporation founded in 1892, best known as the producer of Coca-Cola. The drink industry company also manufactures, sells, and markets other non-alcoholic beverage concentrates and syrups, and alcoholic beverages.