Shares of Coca-Cola Co. (KO, Financial), a major holding of Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), tumbled at least 1% on Tuesday morning on the back of reporting first-quarter sales that declined year over year.
The Atlanta-based company reported net revenue of $8.6 billion, down 1% from the prior-year quarter despite outperforming the consensus estimate of $8.28 billion.
Company reports 25% decline in April volume as coronavirus shuts down away-from-home channels
Coke reported a 25% decline in global volume in April as countries meaningfully increased social distancing and shelter-in-place mandates starting in March. The company said in its FAQ article on the coronavirus outbreak that the closing of restaurants, cancellation of sporting events and material reduction in travel resulted in volume declines primarily in away-from-home channels, which represent over 50% of the company’s revenues. Coke further warned that the company is not expected to achieve its previously announced full-year guidance and that its second-quarter results could see material impacts.
Company updates coronavirus situation in China
CEO Jim Quincey said during the earnings call that the company sees recovery signs in China on the heels of increased consumption as outlets reopen. Despite this, the company warned that the level of output “is still not back to pre-crisis levels” and that on-premise outlets like restaurants and entertainment stadiums might open later than expected.
Shares tumble on revenue decline
Shares of Coca-Cola tumbled to an intraday low of $44.66 on the back of the company’s revenue decline and weak outlook.
GuruFocus ranks Coca-Cola’s profitability 7 out of 10 on several positive investing signs, which include a return on equity that outperforms 97.83% of global competitors and an operating margin that has increased approximately 6.90% per year on average over the past five years.
Buffett’s conglomerate has not released its first-quarter report as the deadline is 45 days after the quarter ends. As of December 2019, Berkshire owns 400 million shares of Coke.
Other gurus with holdings in Coca-Cola include Yacktman Asset Management (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).
Disclosure: No positions.
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