Coca-Cola (KO, Financial) released its second-quarter 2020 results on July 21 before the market opened. While revenue matched Refinitiv’s consensus estimates, earnings exceeded projections.
By the numbers
The Atlanta-based company posted adjusted earnings per share of 42 cents, which reflected a decline of 33% from the same period last year. Revenue of $7.2 billion dropped 28% on a year-over-year basis, the biggest decline in over 25 years. Analysts had predicted EPS of 42 cents on $7.2 billion in revenue.
Organic revenue, barring the impact of foreign currency, acquisitions and divestitures, shrank 26% as compared to the year-ago period.
CEO James Quincey said the following on the earnings report:
"I'm proud of the people of the Coca-Cola system as we continue to adjust and accelerate our strategies in this fast-changing landscape. We believe the second quarter will prove to be the most challenging of the year; however, we still have work to do as we drive our pursuit of 'Beverages for Life' and meet evolving consumer needs."
Segment performance
The soda giant has witnessed as much as a 16% decline in global unit case volume. Having plunged 25% in April to declining only 10% in June depicts how the volume trends picked up on a sequential basis. Away-from-home sales, which accounts for nearly 50% of the company’s revenue, witnessed continuous improvement during the quarter. Higher sales for at-home drinks favorably impacted the metric, despite the lower profit margins.
Unit case volumes for water, enhanced water and sports drinks dropped a combined 24%. Likewise, the volume for sparkling soft drinks was down 12%.
Geographically, sales dipped 16% in North America, 25% in Latin America and 23% in Asia-Pacific. Revenue in the Europe, Middle East and Africa segment tumbled 37% as compared to the prior-year quarter. Global Ventures' revenue plunged 53%, largely driven by the Costa retail store closures in Western Europe.
Looking ahead
The company experienced unit case volume decline in only mid-single digits globally so far in July. The company therefore believes it is on track to bounce back in the second half of the year given the easing of lockdowns as well as improvements in its away-from-home sales.
The company did not issue a full-year 2020 financial forecast, citing the global uncertainty caused by the pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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