Coca-Cola (KO, Financial) released its third-quarter 2020 results on Oct. 22 before the market opened. Both earnings and revenue edged past Refinitiv's consensus estimates. Results were, however, down on a year-over-year basis as restaurants, bars, movie theaters and sports stadiums across the globe were shuttered on account of the coronavirus pandemic.
The key numbers
The Atlanta-based company posted adjusted earnings per share of 55 cents, which reflected a decline of 2% from the same period last year. Revenue of $8.65 billion dropped 9% on a year-over-year basis. Analysts had predicted EPS of 46 cents on $8.36 billion in revenue.
Organic revenue, barring the impact of foreign currency, acquisitions and divestitures, shrank 6% as compared to the year-ago period.
CEO James Quincey said the following on the earnings report:
"Throughout this year's crisis, our system has remained focused on its beverages for life strategy. We are accelerating our transformation that was already underway, shaping our company to recover faster than the broader economic recovery. While many challenges still lie ahead, our progress in the quarter gives me confidence we are on the right path."
Segment performance
Global unit case volume plunged 4% during the quarter as declines in away from home sales, which account for nearly 50% of revenue, offset elevated at-home demand. Away-from-home sales dropped in the mid-teens range during the quarter, which reflects a strong recovery from a mammoth 50% decline in April.
Unit case volumes for water, enhanced water and sports drinks dropped a combined 11%. Likewise, the volume for sparkling soft drinks was down 1%.
Geographically, sales dipped 2% in North America, 23% in Latin America and 9% in Asia-Pacific. Revenue in the Europe, Middle East and Africa segment tumbled 7% as compared to the prior-year quarter. Global Ventures' revenue plunged 19%, largely driven by the Costa retail store closures in Western Europe.
Strategic changes
The soda giant said it would reduce its number of brands by 50% to roughly 200 and focus on popular products that have sold well. Coca-Cola would streamline its beverage portfolio by discontinuing products like ZICO coconut water and Tab sodas.
Additionally, Coca-Cola has also resolved to job cuts to help streamline its business. The company has convinced about 4,000 employees to "voluntarily" give up employment in the U.S., Canada and Puerto Rico.
Looking ahead
The company experienced unit case volume decline in only low-single digits globally so far in October. The company therefore believes it is on track to bounce back in the remainder 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.
Disclosure: I do not hold any positions in the stocks mentioned.
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