Coca-Cola Hit by Resurgence of Covid-19
February 10 2021 - 9:08AM
Dow Jones News
By Jennifer Maloney
The pandemic has been worse this winter than Coca-Cola Co.
expected, but the beverage giant said it expects consumers to
return to normal life in the second half of the year as Covid-19
vaccines roll out across many developed countries.
The company offered an outlook for 2021, saying the first half
of the year would be challenging. Starting in December, "we saw
more restrictions in place than we anticipated," finance chief John
Murphy said in an interview. But "we still think that with vaccine
rollout building momentum in the coming weeks, the second half of
the year will be very strong."
"We also think there's a pent-up demand on the part of people to
get out and about," he added. "There's more light at the end of the
tunnel this year."
Coke expects high-single-digit percentage growth in organic
revenue, which excludes currency swings and acquisitions or
divestitures, in 2021. On that basis, Coke's revenue fell 9% in
2020.
The company reported declines in both profit and revenue in the
fourth quarter compared with a year earlier. Depressed sales from
restaurants and bars more than offset gains from consumers drinking
sodas at home. The company said world-wide volumes fell 3% in the
fourth quarter.
Layoffs and other cost-cutting measures have helped the Atlanta
giant mitigate those declines and improve its operating profit
margins. In December the company said it would cut 2,200 of its
86,000 workers. It has also focused on its core brands, dropping
others like Tab, a diet soda popular in the 1970s, and Zico coconut
water.
Quarterly net income was $1.46 billion, down from $2.04 billion
in the year-ago period. Adjusted earnings per share rose to 47
cents from 44 cents, Coke said, beating the FactSet consensus of 42
cents. Revenue fell 5% to $8.61 billion.
Coke also cautioned it faces a potential $12 billion tax
liability from a long-running dispute with the Internal Revenue
Service. A tax court sided with the IRS last year and ruled Coke
placed too much of its profit in its foreign operations instead of
its higher-taxed domestic parent company. The company said that
because it was confident it would win on appeal, it took a charge
in the latest quarter for 4% of that amount.
"We have reviewed exhaustively the judgment from November with
our advisers and we are, if anything, more of the view that we have
a strong position that we will defend vigorously," Mr. Murphy
said.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
February 10, 2021 08:53 ET (13:53 GMT)
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