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Coca-Cola Posts Higher Third Quarter Earnings Despite Revenue Decline
Posted by: Live investor (IP Logged)
Date: October 15, 2013 05:03PM

Coca-Cola (KO) posted its third quarter results today. The global beverage giant met analyst expectations despite a slowdown in several parts of the world like Mexico and Europe. The net operating profit of the company increased 6% to $2.45 billion in the third quarter of 2013 compared to the year-ago comparable period. Let’s take a closer look at the results.

A Bit In Depth

Total revenue failed to match analyst expectations and fell 3% to $12.03 billion in comparison to $12.34 billion a year ago. The decline in revenue is majorly attributable to the huge restructuring costs related to the bottling operations in Brazil and Philippines. However, the good news is that even though overall sales fell, profit increased 6%. Almost 60% of the soft drink maker’s revenue comes from its international operations. The largest beverage maker’s global sales volume rose 2% as Russia, China and India showed strong performance.

North America sales volume improved 2% as the company’s non-soda offerings were on high demand. Sales of bottled water and still-drinks increased 5%. The beverage company’s soft drink brands including Sprite and Fanta saw sales rise 2%. The beverage giant saw flatter growth in Latin America where Mexico, which is the second largest market of Coke, witnessed soft sales. The company’s revenue increased 4% in Eurasia and Africa, while the Pacific region experienced a sales gain of 5%, thanks to 21% growth in Vietnam and 9% in China.

Arch rival PepsiCo (PEP) is expected to report its third quarter earnings for the year on Oct. 16. Industry analysts forecast the company to post revenue of $17.03 billion and $1.18 earnings per share. In the second quarter 2013, the company beat analyst estimates by recording $16.81 billion revenue and earnings per share of $1.28. It would be interesting to see if the global food and beverage giant matches up to the expectations of industry observers.

Looking Ahead

Coca-Cola is working on the 2014 soccer-related marketing campaign across 170 countries to benefit from the upcoming 2014 FIFA World Cup. The company continues to work on its long-term strategies and aims to keep investing in its brands for future growth.

The soft drink consumption growth rate has been falling in developed markets as people are becoming health conscious. Coca-Cola has been working hard to compensate for the decline by balancing sales in the emerging markets. But Coca-Cola is not the only one facing such challenge. Even PepsiCo is experiencing difficulty with respect to growth in sales of carbonated drinks in developed nations where the obesity rate and sugar levels are a growing concern. It would be interesting to compare both Coca Cola and PepsiCo once the latter posts its third quarter results shortly.


Stocks Discussed: KO, PEP,
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