Coca-Cola (KO, Financial) witnessed a 55% drop in quarterly profit offsetting the impact of a stronger dollar on the company's overseas business. Coca-Cola, which currently has a market cap of $182.06 billion, is a beverage MNC. The company is headquartered in Atlanta, Georgia. Currently, its stock is listed on the New York Stock Exchange. Coca-Cola is also part of DJIA, Russell 1000 Index, S&P 500 index as well as Russell 1000 Growth Stock Index. Most of the company's revenue is generated from U.S. followed by Mexico, India, Brazil and Japan. Currently, Coca-Cola is the world's largest beverage maker.
The net income attributable to Coca-Cola's shareholders fell to $770 million or 17 cents per share in the last quarter ended December 2014. A year earlier, the net income attributable to shareholders was 38 cents per share or $1.71 billion. The net operating revenue fell by a two percent margin to $10.87 billion.
The CEO Speaks
Muhtar Kent, the CEO and Chairman of Coca-Cola, said that their main focus was on accelerating growth and taking advantages of opportunities that would come their way. This would obviously make their position a solid one. He also said that 2015 was like a transition year since initiatives taken would materialize soon. Even though the macroeconomic environment is now unstable and highly volatile, the company hopes to see positive outcomes. Muhtar also said that they are selling more premium priced beverages. The issue of obesity and artificial sweeteners will also be tackled. His main goal is to pare $3 billion from the company's annual costs.
However, 2014 saw a raise in Coke's stock by 8%. This percent is less than Pepsico, Inc. (PEP, Financial), Coca-Cola's main rival. The Frito-Lay division and Latin American growth have boosted Pepsi's profits. Bonnie Herzog, an analyst for Wells Fargo & Co. (WFC ) said that Coca-Cola has shown high conscientiousness in its pricing strategy. Hence, this will contribute to growth in the domestic markets.
The main revenue growth was witnessed in Latin America last quarter followed by 5% gains from North America and Africa-Eurasia. There was a 1% decline in sales in the Asia-Pacific region.
MARKET STATISTICS
Coca-Cola's shares rose by 3.4% in premarket trading. The last three quarters hasn't seen any positive response in the sales in North America. Sales has either remained flat or have declined. The main reason being that U.S. consumers are now more health-conscious and prefer healthy drinks rather than carbonated drinks. Consumers have even shifted away from consuming diet soda since artificial sweeteners are added. However, in the last quarter sales rose to $5.37 billion which accounts to almost half of total sales. Analysts have said that maybe U.S. consumers are paying for for soda although they are drinking less of it. This high consumer spending is due to a bright job market as well decreased gasoline prices. Hence consumers do not mind spending more. The consumer confidence has increased tremendously, according to a report released last month. The report also stated that this confidence is at the highest peak since the last seven years.
Last October the company stated that they would try their best to cut costs. They also announced their plan to sell its lower-margin bottling operations. And it looks like their efforts have certainly paid off. Excluding items, Coca-Cola has reported an earnings of 44 cents per share. As stated earlier, the net operating revenue fell by 2% to $10.87 billion. According to Thomson Reuters Corp (TRI, Financial), analysts are expecting a profit of 42 cents per share on $10.76 billion revenue. Finally, Coca-Cola has said in a statement that they gained volume and value share in still as well as sparkling beverages, juice drinks, juice as well as ready-to-drink tea. The main reason that the company cited for this growth is due to marketing investments and a rational approach to their pricing strategies.
