Coca-Cola (KO, Financial) released its first-quarter fiscal 2021 earnings results on April 19 before the market opened. Both earnings and revenue beat Refinitiv's consensus estimates.
The key numbers
The Atlanta-based company posted adjusted earnings per share of 55 cents, which reflected a growth of 7.8% from the same period last year. The company cited its cost-cutting efforts as the reason for earnings growth.
Revenue of $9 billion surged 5% on a year-over-year basis even though the restaurants, bars, movie theaters and sports stadiums across the globe were partially shuttered on account of the Coronavirus pandemic. The company recovered lost ground thanks to elevated at-home sales, which grew sequentially during the quarter.
Analysts had predicted adjusted EPS of 50 cents on $8.6 billion in revenue.
Organic revenue, barring the impact of foreign currency, acquisitions and divestitures, soared 6% as compared to the year-ago period.
CEO James Quincey said the following on the earnings report: "We remain focused on emerging stronger and executing against our growth accelerators during the recovery phase. We are pleased with the progress we are making."
Segment performance
Global unit case volume remained flat during the quarter as declines in away from home sales, which account for nearly 50% of revenue, were only partially offset by strong at-home sales. 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 last year.
Unit case volumes for hydration, sports, coffee and teadropped a combined 11%. By contrast, the volume for sparkling soft drinks grew 4%.
Geographically, sales increased 3% in North America and 24% in Asia Pacific. Revenue in the Europe, Middle East and Africa segment tumbled 6% as compared to the prior-year quarter. Global Ventures' revenue soared 14%, largely driven by robust pricing coupled with effective cost management.
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 plans to 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 said it 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 the mid-single digits globally through early April. The company therefore believes it is on track to bounce back in the quarters ahead given the easing of lockdowns as well as improvements in its away-from-home sales.
The company has issued a vague full-year 2021 financial forecast. Organic revenue is estimated to grow in the high-single digits range. Adjusted earnings are projected to rise between high single digits and low double digits, while free cash flow guidance is expected to be at least $8.5 billion. Capital spending is expected to reach roughly $1.5 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
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