Coca-Cola Updates Plans for Coca-Cola Beverages Africa, Including Intent to Retain Majority Stake in Bottler
May 20 2019 - 6:55AM
Business Wire
The Coca-Cola Company announced today that it will maintain its
majority stake in Coca-Cola Beverages Africa for the foreseeable
future.
With the change, Coca-Cola will begin presenting the financial
statements of CCBA within its results from continuing operations in
the second quarter of 2019, in accordance with U.S. accounting
standards. CCBA has been accounted for as a discontinued operation
since Coca-Cola became the controlling shareowner in October
2017.
Coca-Cola previously announced its intention to refranchise
CCBA, which is the largest bottler of Coca-Cola beverages in
Africa, serving 12 countries. The company has had discussions with
a number of potential partners.
“Coca-Cola Beverages Africa is a very important part of the
Coca-Cola system, and we see great opportunities to create even
more value,” said Coca-Cola President and Chief Operating Officer
Brian Smith. “While we remain committed to the refranchising
process, we believe it’s in the best interests of all involved for
Coca-Cola to continue to hold and operate CCBA.”
In reclassifying CCBA’s results into continuing operations,
Coca-Cola expects the following:
- The company
will provide reclassified prior year financial
information prior to the second quarter earnings release.
- Depreciation and amortization for
CCBA will be reinstated, per accounting guidelines.
Coca-Cola estimates depreciation and
amortization expense for 2018 of approximately $400
million on a comparable basis.
- With the reclassification, Coca-Cola
does not expect an impact to its 2019 organic revenue and
comparable EPS growth guidance. The company expects an increase in
its 2019 guidance for cash from operations of approximately $400
million and an increase in capital expenditures of approximately
$400 million.
- CCBA’s results will be reported as
part of the Bottling Investments Group segment.
CCBA was formed in 2016 through the combination of the African
nonalcoholic ready-to-drink bottling interests of SABMiller plc,
The Coca-Cola Company and Gutsche Family Investments. AB InBev
later acquired SABMiller and reached an agreement to transition AB
InBev’s 54.5% equity stake in CCBA to Coca-Cola. That 2017
transaction made Coca-Cola the controlling shareowner of CCBA.
About The Coca-Cola
Company
The Coca-Cola Company (NYSE: KO) is a total beverage company,
offering over 500 brands in more than 200 countries and
territories. In addition to the company’s Coca-Cola brands, our
portfolio includes some of the world’s most valuable beverage
brands, such as AdeS plant-based beverages, Ayataka green tea,
Costa coffee, Dasani waters, Del Valle juices and nectars, Fanta,
Georgia coffee, Gold Peak teas and coffees, Honest Tea, innocent
smoothies and juices, Minute Maid juices, Powerade sports drinks,
Simply juices, smartwater, Sprite, vitaminwater and ZICO coconut
water. We’re constantly transforming our portfolio, from reducing
sugar in our drinks to bringing innovative new products to market.
We’re also working to reduce our environmental impact by
replenishing water and promoting recycling. With our bottling
partners, we employ more than 700,000 people, helping bring
economic opportunity to local communities worldwide. Learn
more at Coca-Cola Journey at www.coca-colacompany.com and follow us
on Twitter, Instagram, Facebook and LinkedIn.
The fairlife® brand is owned by fairlife LLC, our joint venture
with Select Milk Producers Inc. Products from fairlife are
distributed by our company and certain of our bottling
partners.
Forward-Looking
Statements
This press release may contain statements, estimates or
projections that constitute “forward-looking statements” as defined
under U.S. federal securities laws. Generally, the words “believe,”
“expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and
similar expressions identify forward-looking statements, which
generally are not historical in nature. Forward-looking statements
are subject to certain risks and uncertainties that could cause
actual results to differ materially from The Coca-Cola Company’s
historical experience and our present expectations or projections.
These risks include, but are not limited to, obesity and other
health-related concerns; failure to address evolving consumer
product and shopping preferences; increased competition; water
scarcity and poor quality; increased demand for food products and
decreased agricultural productivity; product safety and quality
concerns; public debate and concern about perceived negative health
consequences of certain ingredients, such as non-nutritive
sweeteners and biotechnology-derived substances, and of other
substances present in our beverage products or packaging materials;
an inability to be successful in our innovation activities; an
inability to protect our information systems against service
interruption, misappropriation of data or breaches of security;
failure to comply with personal data protection laws; an inability
to be successful in our efforts to digitize the Coca-Cola system;
changes in the retail landscape or the loss of key retail or
foodservice customers; an inability to expand operations in
emerging and developing markets; fluctuations in foreign currency
exchange rates; interest rate increases; an inability to maintain
good relationships with our bottling partners; a deterioration in
our bottling partners' financial condition; increases in income tax
rates, changes in income tax laws or unfavorable resolution of tax
matters; increased or new indirect taxes in the United States and
throughout the world; failure to realize the economic benefits from
or an inability to successfully manage the possible negative
consequences of our productivity and reinvestment program; an
inability to attract or retain a highly skilled and diverse
workforce; increase in the cost, disruption of supply or shortage
of energy or fuel; increase in the cost, disruption of supply or
shortage of ingredients, other raw materials, packaging materials,
aluminum cans and other containers; changes in laws and regulations
relating to beverage containers and packaging; significant
additional labeling or warning requirements or limitations on the
marketing or sale of our products; unfavorable general economic
conditions in the United States; unfavorable economic and political
conditions in international markets; litigation or legal
proceedings; increased legal and reputational risk associated with
conducting business in markets with high-risk legal compliance
environments; failure by third-party service providers and business
partners to satisfactorily fulfill their commitments and
responsibilities; failure to adequately protect, or disputes
relating to, trademarks, formulae and other intellectual property
rights; adverse weather conditions; climate change; damage to our
brand image, corporate reputation and social license from negative
publicity, whether or not warranted, concerning product safety or
quality, human and workplace rights, obesity or other issues;
changes in, or failure to comply with, the laws and regulations
applicable to our products or our business operations; changes in
accounting standards; an inability to achieve our overall long-term
growth objectives; deterioration of global credit market
conditions; default by or failure of one or more of our
counterparty financial institutions; an inability to renew
collective bargaining agreements on satisfactory terms, or strikes,
work stoppages or labor unrest experienced by us or our bottling
partners; future impairment charges; future multi-employer pension
plan withdrawal liabilities; an inability to successfully integrate
and manage our company-owned or -controlled bottling operations or
other acquired businesses or brands; an inability to successfully
manage our refranchising activities; failure to realize a
significant portion of the anticipated benefits of our strategic
relationship with Monster; global or regional catastrophic events;
and other risks discussed in our company’s filings with the
Securities and Exchange Commission (SEC), including our Annual
Report on Form 10-K for the year ended December 31, 2018 and our
subsequently filed Quarterly Report on Form 10-Q, which filings are
available from the SEC. You should not place undue reliance on
forward-looking statements, which speak only as of the date they
are made. The Coca-Cola Company undertakes no obligation to
publicly update or revise any forward-looking statements.
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