Coca-Cola shares fizz as beverage maker raises revenue outlook
Coke’s revenue climbed 37% in the second quarter as pandemic restrictions eased
Sales at beverage multinational Coca-Cola beat expectations in the second quarter and the company raised its revenue forecast for the year as it saw a significant bounce back in its business, a stark contrast to the pandemic-related lockdowns that diminished sales in 2020.
Coke’s organic revenue, which excludes the impact of currency or acquisitions, climbed 37% in the quarter ended July 2, the Atlanta-based company said in a statement Wednesday. Analysts had been expecting 29.3% growth, according to forecasts compiled by Bloomberg. Earnings of 68c a share topped analysts’ estimate of 56c.
“Our results in the second quarter show how our business is rebounding faster than the overall economic recovery,” CEO James Quincey said in the statement. The company in particular cited a rebound in “away-from-home channels” as pandemic restrictions eased, sending sales above 2019 levels.
The results are evidence that consumers who were locked down in their homes during the same period 2020 are returning to reopened restaurants, amusement parks and stadiums — all of the on-premise public venues where the company’s soft drinks are poured.
Coke shares rose 2.3% on Wednesday in New York. The stock was up 1.8% in 2021 by Tuesday.
With some parts of the world affected by low vaccination rates and new strains of the coronavirus, Coke said that though its global unit case volume was benefiting from the recovery in many markets, the improvement was offset by a resurgence of the virus in several areas. Unit case volume grew 18% overall, climbing 17% in North America and 21% in the Europe, Middle East and Africa region.
Like other soft-drink makers, Coke is feeling the effects of inflated pricing of commodities and materials. CFO John Murphy said the company is comfortable that it can hedge against those pressures for now but is less certain about 2022.
“The pandemic has put pressure on supply chains around the world, be it the commodities input or the transportation costs around the world,” Murphy said in an interview. “In 2022 there are more pressures coming at us, and we are working closely with our bottling partners to mitigate some of those pressures. It’s difficult to tell how far into 2022 those pressures persist.”
One key ingredient the cool drink maker will use to recover from the pandemic is consumer pricing, Murphy said. On a two-year basis, from the pre-pandemic levels of 2019 through 2021, prices on Coke’s products will have risen 2% to 3%, Murphy said.
“We actually feel pretty good with where we’re going with pricing,” he said. “We will stay on pace with inflation, but at the same time, make sure our portfolio prices are attractive to the consumer.”
The company raised its forecast for full-year organic sales growth to a range of 12% to 14%, from a prior expectation of high single digits. Comparable earnings per share could rise as much as 15%, Coke said, up from a prior outlook of no more than low double digits.
Bloomberg News. More stories like this are available on bloomberg.com
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