Global Unit Case Volume Grew 18%
Net Revenues Grew 42%; Organic Revenues
(Non-GAAP) Grew 37%
Operating Income Grew 52%; Comparable Currency
Neutral Operating Income (Non-GAAP) Grew 46%
Operating Margin Was 29.8% Versus 27.7% in the
Prior Year; Comparable Operating Margin (Non-GAAP) Was 31.7% Versus
30.0% in the Prior Year
EPS Grew 48% to $0.61; Comparable EPS
(Non-GAAP) Grew 61% to $0.68
The Coca-Cola Company today reported strong second quarter 2021
results and year-to-date performance. “Our results in the second
quarter show how our business is rebounding faster than the overall
economic recovery, led by our accelerated transformation. As a
result, we are encouraged and, despite the asynchronous nature of
the recovery, we are raising our full year guidance,” said James
Quincey, Chairman and CEO of The Coca-Cola Company. “We are
executing against our growth plans and our system is aligned. We
are better equipped than ever to win in this growing, vibrant
industry and to accelerate value creation for our
stakeholders.”
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the full release here:
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Highlights
Quarterly Performance
- Revenues: Net revenues grew 42% to $10.1 billion, and
organic revenues (non-GAAP) grew 37%. Revenue performance included
26% growth in concentrate sales and 11% growth in price/mix.
Revenue growth was driven by the ongoing recovery in markets where
coronavirus-related uncertainty is abating, along with the benefit
from cycling revenue declines from the impact of the coronavirus
pandemic last year.
- Margin: Operating margin, which included items impacting
comparability, was 29.8% versus 27.7% in the prior year, while
comparable operating margin (non-GAAP) was 31.7% versus 30.0% in
the prior year. Operating margin expansion was primarily driven by
favorable channel and package mix where coronavirus-related
uncertainty is abating, partially offset by a significant increase
in marketing expenses versus the prior year.
- Earnings per share: EPS grew 48% to $0.61, and
comparable EPS (non-GAAP) grew 61% to $0.68. Comparable EPS
(non-GAAP) growth included the impact of a 5-point currency
tailwind.
- Market share: The company gained value share in total
nonalcoholic ready-to-drink (NARTD) beverages driven by a share
gain in both at-home and away-from-home channels. The company’s
value share in total NARTD beverages is now ahead of the 2019
level.
- Cash flow: Year-to-date cash flow from operations was
$5.5 billion, up $2.7 billion versus the prior year, driven by
strong business performance, five additional days in the first
quarter and working capital initiatives. Year-to-date free cash
flow (non-GAAP) was $5.1 billion, up $2.8 billion versus the prior
year, driven by cash flow from operations along with lower capital
expenditures versus the prior year.
Company Updates
- Business environment update: Global unit case volume
benefited from the ongoing recovery in many markets, partially
offset by the impact of a resurgence of the coronavirus in several
markets. As a result, when compared to 2019 volume levels, second
quarter volume growth was in line with the first quarter of 2021.
The company saw away-from-home channels rebound as restrictions
eased in certain markets, driving value across the enterprise and
leading to second quarter revenues ahead of the 2019 level. While
coronavirus-related uncertainty continues, the company remains
agile in order to execute on its strategic priorities and build on
the work that has been done in the past year to navigate an
asynchronous recovery.
- Continuing innovation through loved and scaled brands:
The company, with its disciplined approach to scaling big bets,
recently announced the launch of a new and improved Coca-Cola® Zero
Sugar recipe in the United States that brings it closer to the
great taste of original Coca-Cola. New packaging is simplified and
celebrates the iconic Coca-Cola logo, beginning with the brand’s
universally recognized red. The Coca-Cola logo in black Spencerian
script signals the Zero Sugar variety. The new, global marketing
approach for Coca-Cola Zero Sugar will be supported by scaled
advertisements and a 360-degree marketing activation plan that
invites consumers to try the product and find out if it’s the “Best
Coke® Ever?” The new Coca-Cola Zero Sugar previously launched in
five operating units across multiple countries, including Japan,
Turkey, parts of Latin America and parts of Europe. Overall,
Coca-Cola Zero Sugar grew 15% year-to-date, resulting in high
single-digit growth versus 2019.
- Transforming the digital ecosystem to create and capture
value: The company is leveraging the strength of the Coca-Cola
system to drive value for stakeholders. The Wabi™ ecosystem, which
leverages the system’s unrivaled distribution network and connects
businesses to businesses to consumers, continues to accelerate and
is now present in 14 countries, with gross merchandising value
growing significantly. The company’s footprint in e-commerce also
continues to expand. The company’s direct-to-consumer Coke ON® app
in Japan, which connects consumers to the system’s vending
machines, reached more than 28 million downloads with significant
gains in consumer awareness versus the prior year. In North America
e-commerce retail, the company continues to be the market leader in
the total NARTD category, growing retail value 54% year-to-date. In
Europe, our e-commerce is growing retail value faster than 50%
across key markets, resulting in a strong value share gain
year-to-date.
- Accelerating sustainable business practices: During the
quarter, the company continued its sustainability journey, which
included announcing its plans to use 100% recycled plastic (rPET)
in all on-the-go bottles across its portfolio in Great Britain
beginning in September, and announcing that by the end of summer
all locally manufactured packages in Belgium and Luxembourg are
expected to be 100% rPET. These initiatives will save approximately
43,000 tonnes of virgin plastic each year. The company also
announced a partnership with The Ocean Cleanup to help stem the
tide of marine waste by intercepting plastic debris in rivers
around the world. The partnership brings together the company’s
scale and global network with The Ocean Cleanup’s technology and
data-driven solutions to address 15 rivers by the end of 2022.
Finally, the company continued its multi-faceted approach to
diversity, equity and inclusion by announcing plans to nearly
double its spending with minority-owned media companies in North
America over the next three years.
Operating Review – Three
Months Ended July 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
26
11
5
0
42
37
18
Europe, Middle East & Africa
41
20
6
0
67
61
21
Latin America
29
9
3
0
41
39
12
North America
16
12
1
(1)
28
28
17
Asia Pacific
15
6
6
0
27
21
16
Global Ventures3
60
57
23
0
139
117
48
Bottling Investments
25
3
9
0
38
29
25
Operating Income and
EPS
Percent Change
Reported Operating Income
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated
52
3
3
46
Europe, Middle East & Africa
60
(2)
6
56
Latin America
35
2
1
32
North America
94
47
1
47
Asia Pacific
17
1
7
10
Global Ventures
—4
—
—
—
Bottling Investments
631
360
(91)
362
Percent Change
Reported EPS
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated EPS
48
(13)
5
55
Note: Certain rows may not add due to rounding.
1 For Bottling Investments, this
represents the percent change in net revenues attributable to the
increase (decrease) in unit case volume computed based on total
sales (rather than average daily sales) in each of the
corresponding periods after considering the impact of structural
changes, if any.
2 Organic revenues, comparable currency
neutral operating income and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3 Due to the combination of multiple
business models in the Global Ventures operating segment, the
composition of concentrate sales and price/mix may fluctuate
materially on a periodic basis. Therefore, the company places
greater focus on revenue growth as the best indicator of underlying
performance of the Global Ventures operating segment.
4 Reported operating income for Global
Ventures for the three months ended July 2, 2021 was $75 million.
Reported operating loss for Global Ventures for the three months
ended June 26, 2020 was $102 million. Therefore, the percent change
is not meaningful.
In addition to the data in the preceding tables, operating
results included the following:
Consolidated
- Unit case volume grew 18% in the quarter, resulting in even
performance on a two-year basis, driven by the ongoing recovery in
markets where coronavirus-related uncertainty is abating along with
the benefit from cycling the impact of the coronavirus pandemic
last year. Both developed and developing and emerging markets led
the recovery, and both grew double digits in the quarter. Markets
such as China, Brazil and Nigeria grew volume ahead of 2019 levels
while other markets, including India, continued to be under
pressure versus 2019, driven by the continued impact of the
coronavirus pandemic. Category performance was as follows:
- Sparkling soft drinks grew 14%, led by strong growth in the
United States, India and Brazil. Trademark Coca-Cola grew 12%,
resulting in volume ahead of the 2019 level, led by Europe, Middle
East & Africa and Latin America. Sparkling flavors grew 18%,
led by solid growth in both Trademark Sprite and Trademark
Fanta.
- Nutrition, juice, dairy and plant-based beverages grew 25% due
to solid performance by Minute Maid® and fairlife® in North
America, Minute Maid Pulpy in China and Maaza® in India.
- Hydration, sports, coffee and tea grew 25%. Hydration grew 21%,
with double-digit growth across all geographic operating segments.
Sports drinks grew 35%, resulting in volume ahead of the 2019
level, primarily driven by Powerade® in North America. Tea grew
18%, led by growth in the United States, Japan and Brazil. Coffee
grew 78%, primarily driven by the reopening of Costa® retail stores
in the United Kingdom as coronavirus-related uncertainty continued
to abate.
- Price/mix grew 11% for the quarter, primarily driven by
favorable channel and package mix due to cycling the impact of the
coronavirus pandemic last year, along with positive segment mix
from Global Ventures and Bottling Investments. Concentrate sales
were 9 points ahead of unit case volume in the quarter, primarily
due to cycling the rationalization of stock levels in the prior
year along with the timing of shipments in the current year.
Year-to-date concentrate sales were 6 points ahead of unit case
volume primarily due to five additional days in the first quarter,
along with cycling the timing of shipments in the prior year.
- Operating income grew 52%, which included items impacting
comparability and a 5-point currency tailwind. Comparable currency
neutral operating income (non-GAAP) grew 46%, driven by strong
organic revenue (non-GAAP) growth across all operating segments,
partially offset by a significant increase in marketing expenses
versus the prior year.
Europe, Middle East &
Africa
- Unit case volume grew 21% in the quarter, driven by the ongoing
recovery in markets where coronavirus-related uncertainty is
abating, along with the benefit from cycling the impact of the
coronavirus pandemic last year. Growth was led by Russia, Spain and
Germany in Europe, Nigeria in Africa, and Turkey and Pakistan in
Eurasia and Middle East.
- Price/mix grew 20% for the quarter, driven by favorable channel
and package mix due to cycling the impact of the coronavirus
pandemic last year, along with the timing of deductions. For the
quarter, concentrate sales were 20 points ahead of unit case volume
due to cycling the rationalization of stock levels in the prior
year, along with the timing of shipments in the current year.
Year-to-date concentrate sales were 9 points ahead of unit case
volume primarily due to five additional days in the first quarter,
along with cycling the timing of shipments in the prior year.
- Operating income grew 60%, which included items impacting
comparability and a currency tailwind. Comparable currency neutral
operating income (non-GAAP) grew 56%, primarily driven by strong
organic revenue (non-GAAP) growth across all operating units,
partially offset by a significant increase in marketing expenses
versus the prior year.
- The company gained value share in total NARTD beverages along
with gaining or maintaining share across all categories.
Latin America
- Unit case volume grew 12% in the quarter, resulting in volume
ahead of the 2019 level, primarily driven by the ongoing recovery
in away-from-home channels and continued strength in at-home
channels. Growth was led by Brazil and Mexico, driven by solid
performance of sparkling soft drinks and the hydration
category.
- Price/mix grew 9%, driven by pricing initiatives along with
favorable channel and package mix. For the quarter, concentrate
sales were 17 points ahead of unit case volume due to cycling the
rationalization of stock levels in the prior year, along with the
timing of shipments in the current year. Year-to-date concentrate
sales were 8 points ahead of unit case volume primarily due to five
additional days in the first quarter, along with the timing of
shipments in the current year.
- Operating income grew 35%, which included items impacting
comparability and a 1-point currency tailwind. Comparable currency
neutral operating income (non-GAAP) grew 32%, driven by solid
organic revenue (non-GAAP) growth, partially offset by a
significant increase in marketing expenses versus the prior
year.
- The company lost value share in total NARTD beverages as share
gains in Brazil and Argentina were more than offset by share losses
in Mexico and Ecuador.
North America
- Unit case volume grew 17% in the quarter. Growth was led by the
recovery in the fountain business across all categories as
coronavirus-related uncertainty continued to abate during the
quarter. At-home channel strength continued during the quarter, and
at-home channels continued to see volume ahead of 2019 levels.
- Price/mix grew 12% for the quarter, primarily driven by the
recovery in the fountain business and away-from-home channels,
along with solid growth in premium offerings and juice and dairy
finished-goods brands. Year-to-date concentrate sales were 3 points
ahead of unit case volume, primarily due to five additional days in
the first quarter.
- Operating income grew 94%, which included tailwinds from items
impacting comparability and currency. Comparable currency neutral
operating income (non-GAAP) grew 47%, driven by strong organic
revenue (non-GAAP) growth, partially offset by a significant
increase in marketing expenses versus the prior year.
- The company gained value share in total NARTD beverages led by
a strong recovery in away-from-home channels along with continued
strong performance in at-home channels.
Asia Pacific
- Unit case volume grew 16% in the quarter, driven by growth
across all operating units due to the ongoing recovery in markets
where coronavirus-related uncertainty is abating, along with the
benefit from cycling the impact of the coronavirus pandemic last
year. Growth was led by sparkling flavors and the hydration
category.
- Price/mix grew 6%, driven by favorable channel and package mix
due to cycling the impact of the coronavirus pandemic last year,
along with the timing of deductions. Year-to-date concentrate sales
were 5 points ahead of unit case volume, primarily due to five
additional days in the first quarter.
- Operating income grew 17%, which included a 7-point currency
tailwind. Comparable currency neutral operating income (non-GAAP)
grew 10%, driven by solid organic revenue (non-GAAP) growth,
partially offset by a significant increase in marketing expenses
versus the prior year.
- The company gained value share in total NARTD beverages driven
by share gains in Japan and Southeast Asia.
Global Ventures
- Net revenues grew 139% in the quarter, which included a
23-point currency tailwind. Organic revenues (non-GAAP) grew 117%.
Revenue growth was primarily driven by the reopening of Costa
retail stores in the United Kingdom as coronavirus-related
uncertainty continued to abate.
- Operating income growth and comparable currency neutral
operating income (non-GAAP) growth were driven by strong organic
revenue (non-GAAP) growth.
Bottling Investments
- Unit case volume grew 25% in the quarter, primarily driven by
solid growth in India and South Africa.
- Price/mix grew 3%, driven by pricing and trade promotion
optimization in most markets, along with a benefit from category
and package mix.
- Operating income growth of 631% included a tailwind from items
impacting comparability and a headwind from currency. Comparable
currency neutral operating income (non-GAAP) grew 362%, driven by
solid organic revenue (non-GAAP) growth along with effective cost
management.
Operating Review – Six Months
Ended July 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
15
5
2
0
22
20
9
Europe, Middle East & Africa
18
3
3
0
24
21
9
Latin America
14
7
(5)
0
17
22
6
North America
8
8
0
(1)
15
15
5
Asia Pacific
17
2
6
0
26
20
13
Global Ventures3
27
9
11
0
47
36
19
Bottling Investments
18
4
3
0
24
22
14
Operating Income and
EPS
Percent Change
Reported Operating Income
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated
32
6
1
24
Europe, Middle East & Africa
17
(4)
3
18
Latin America
18
0
(5)
23
North America
99
63
1
35
Asia Pacific
25
(1)
7
18
Global Ventures
—4
—
—
—
Bottling Investments
210
94
(33)
149
Percent Change
Reported EPS
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated EPS
7
(25)
2
30
Note: Certain rows may not add due to rounding.
1 For Bottling Investments, this
represents the percent change in net revenues attributable to the
increase (decrease) in unit case volume computed based on total
sales (rather than average daily sales) in each of the
corresponding periods after considering the impact of structural
changes, if any.
2 Organic revenues, comparable currency
neutral operating income and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3 Due to the combination of multiple
business models in the Global Ventures operating segment, the
composition of concentrate sales and price/mix may fluctuate
materially on a periodic basis. Therefore, the company places
greater focus on revenue growth as the best indicator of underlying
performance of the Global Ventures operating segment.
4 Reported operating income for Global
Ventures for the six months ended July 2, 2021 was $101 million.
Reported operating loss for Global Ventures for the six months
ended June 26, 2020 was $83 million. Therefore, the percent change
is not meaningful.
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 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 items impacting comparability throughout 2021.
The unavailable information could have a significant impact on the
company’s full year 2021 reported financial results.
Full Year 2021
The company expects to deliver organic revenue (non-GAAP) growth
of 12% to 14%. – Updated
For comparable net revenues (non-GAAP), the company expects a 1%
to 2% currency tailwind based on the current rates and including
the impact of hedged positions. – Unchanged
The company’s underlying effective tax rate (non-GAAP) is
estimated to be 19.1%. This does not include the impact of the
ongoing tax litigation with the U.S. Internal Revenue Service, if
the company were not to prevail. – Unchanged
Given the above considerations, the company expects to deliver
comparable EPS (non-GAAP) growth of 13% to 15% versus $1.95 in
2020. – Updated
Comparable EPS (non-GAAP) percentage growth includes a 2% to 3%
currency tailwind based on the current rates and including the
impact of hedged positions. – Unchanged
The company expects to generate free cash flow (non-GAAP) of at
least $9.0 billion through cash flow from operations of at least
$10.5 billion less capital expenditures of approximately $1.5
billion. This does not include any potential payments related to
the ongoing tax litigation with the U.S. Internal Revenue Service.
– Updated
Third Quarter 2021
Considerations – New
Comparable net revenues (non-GAAP) are expected to include an
approximate 2% currency tailwind based on the current rates and
including the impact of hedged positions.
Comparable EPS (non-GAAP) is expected to include an approximate
3% to 4% currency tailwind based on the current rates and including
the impact of hedged positions.
Notes
- All references to growth rate percentages and share compare the
results of the period to those of the prior year comparable period,
unless otherwise noted.
- All references to volume and volume percentage changes indicate
unit case volume, unless otherwise noted. All volume percentage
changes are computed based on average daily sales, unless otherwise
noted. “Unit case” means a unit of measurement equal to 192 U.S.
fluid ounces of finished beverage (24 eight-ounce servings), with
the exception of unit case equivalents for Costa non-ready-to-drink
beverage products which are primarily measured in number of
transactions. “Unit case volume” means the number of unit cases (or
unit case equivalents) of company beverages directly or indirectly
sold by the company and its bottling partners to customers or
consumers.
- “Concentrate sales” represents the amount of concentrates,
syrups, beverage bases, source waters and powders/minerals (in all
instances expressed in equivalent unit cases) sold by, or used in
finished beverages sold by, the company to its bottling partners or
other customers. For Costa non-ready-to-drink beverage products,
“concentrate sales” represents the amount of coffee beans (in all
instances expressed in equivalent unit cases) sold by the company
to customers or consumers. In the reconciliation of reported net
revenues, “concentrate sales” represents the percent change in net
revenues attributable to the increase (decrease) in concentrate
sales volume for the geographic operating segments and the Global
Ventures operating segment after considering the impact of
structural changes, if any. For the Bottling Investments operating
segment, this represents the percent change in net revenues
attributable to the increase (decrease) in unit case volume
computed based on total sales (rather than average daily sales) in
each of the corresponding periods after considering the impact of
structural changes, if any. The Bottling Investments operating
segment reflects unit case volume growth for consolidated bottlers
only.
- “Price/mix” represents the change in net operating revenues
caused by factors such as price changes, the mix of products and
packages sold, and the mix of channels and geographic territories
where the sales occurred.
- First quarter 2021 financial results were impacted by five
additional days as compared to first quarter 2020, and fourth
quarter 2021 financial results will be impacted by six fewer days
as compared to fourth quarter 2020. Unit case volume results for
the quarters are not impacted by the variances in days due to the
average daily sales computation referenced above.
Conference Call
The company is hosting a conference call with investors and
analysts to discuss second quarter 2021 operating results today,
July 21, 2021, at 8:30 a.m. ET. The company invites participants to
listen to a live webcast of the conference call on the company’s
website, http://www.coca-colacompany.com, in the “Investors”
section. An audio replay in downloadable digital format and a
transcript of the call will be available on the website within 24
hours following the call. Further, the “Investors” section of the
website includes certain supplemental information and a
reconciliation of non-GAAP financial measures to the company’s
results as reported under GAAP, which may be used during the call
when discussing financial results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210721005337/en/
Investors and Analysts: Tim
Leveridge, koinvestorrelations@coca-cola.com Media: Scott Leith, sleith@coca-cola.com
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