Coca-Cola Posts 11% Drop in Revenue Amid Pandemic Pressure

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The Coca-Cola Company today reported fourth quarter and full-year 2020 results, including sequential improvement in volume trends.

The company also provided an update on its strategic transformation initiatives.

Together with its bottling partners, the company continues to focus on moving swiftly to execute against system priorities and to win in the marketplace.

Highlights

Global Unit Case Volume Declined 3% for the Quarter and 6% for the Full Year
Net Revenues Declined 5% for the Quarter and 11% for the Full Year;
Organic Revenues (Non-GAAP) Declined 3% for the Quarter and 9% for the Full Year
Operating Income Grew 8% for the Quarter and Declined 11% for the Full Year;
Comparable Currency Neutral Operating Income (Non-GAAP) Grew 14% for the Quarter and Was Even for the Full Year
Fourth Quarter EPS Declined 29% to $0.34, and Comparable EPS (Non-GAAP) Grew 6% to $0.47; Full Year EPS Declined 13% to $1.79, and Comparable EPS (Non-GAAP) Declined 8% to $1.95
Cash from Operations Was $9.8 Billion for the Full Year, Down 6%; Full-Year Free Cash Flow (Non-GAAP) Was $8.7 Billion, Up 3%
James Quincey, chairman and CEO of The Coca-Cola Company said,

“In 2020, employees from across The Coca-Cola Company and its bottling system worked tirelessly to learn and adapt amidst a global crisis,”

“The progress we made in 2020, including the actions taken to accelerate the transformation of our company, gives us confidence in returning to growth in the year ahead.

While near-term uncertainty remains, we are well-positioned to emerge stronger from the crisis, driven by our purpose and our beverages for life ambition.”

Quarterly / Full Year Performance
Revenues: For the quarter, net revenues declined 5% to $8.6 billion and organic revenues (non-GAAP) declined 3%. This was driven by a 3% decline in price/mix while concentrate sales were even.

The quarter included two additional days, which resulted in an approximate 2-point benefit to revenue growth.

The company continued to see improvement in trends compared to prior quarters. For the year, net revenues declined 11% to $33.0 billion and organic revenues (non-GAAP) declined 9%. This was driven by a 7% decline in concentrate sales and a 2% decline in price/mix.

Margin: For the quarter, operating margin, which included items impacting comparability, was 27.2% versus 23.9% in the prior year, while comparable operating margin (non-GAAP) was 27.3% versus 24.8% in the prior year.

For the full year, operating margin, which included items impacting comparability, was 27.3% versus 27.1% in the prior year, while comparable operating margin (non-GAAP) was 29.6% versus 27.9% in the prior year.

For both the quarter and the full year, operating margin expansion was primarily driven by effective cost management, partially offset by top-line pressure and currency headwinds.

Earnings per share: For the quarter, EPS declined 29% to $0.34, and comparable EPS (non-GAAP) grew 6% to $0.47. For the full year, EPS declined 13% to $1.79, and comparable EPS (non-GAAP) declined 8% to $1.95.

Fourth quarter and full year comparable EPS (non-GAAP) performance included the impact of 9-point and 6-point currency headwinds, respectively.

Market share: For the quarter, the company’s value share in total nonalcoholic ready-to-drink (NARTD) beverages was even, while for the full year, the company lost NARTD value share. For both the quarter and the full year, the company gained underlying share in both at-home and away-from-home channels, which was 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 $9.8 billion for the year, down 6%, largely driven by pressure on the business due to the coronavirus pandemic and a currency headwind.

Full-year free cash flow (non-GAAP) was $8.7 billion, up 3%, primarily driven by lower capital expenditures versus the prior year.

Outlook
The 2021 outlook information provided below includes forward-looking non-GAAP financial measures, which management uses in measuring performance.

The company is not able to reconcile the full year 2021 projected organic revenues (non-GAAP) to full-year 2021 projected reported net revenues, full-year 2021 projected comparable net revenues (non-GAAP) to full-year 2021 projected reported net revenues, full-year 2021 projected underlying effective tax rate (non-GAAP) to full-year 2021 projected reported effective tax rate or full-year 2021 projected comparable EPS (non-GAAP) to full-year 2021 projected reported EPS without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the actual impact of changes in foreign currency exchange rates; the exact timing and amount of acquisitions, divestitures and/or structural changes; and the exact timing and amount of comparability items throughout 2021.

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