Coca-Cola (KO, Financial) released its first-quarter financial results on April 23 before the market opened. Thanks to terrific organic sales growth and improved operating margins, the international beverage giant registered stronger-than-expected first-quarter earnings.
Coca-Cola’s shares rose 3.9% in the pre-market session.
Key metrics
Coca-Cola recorded earnings per share of 48 cents from continuing operations in the first quarter, which beat the 46-cent consensus forecast. The company’s revenue totaled $8.02 billion, up 5% from the same period last year.
In a statement, CEO James Quincey commented on the company’s performance:
"We're encouraged by our first quarter results as our disciplined growth strategies continue to deliver strong underlying performance. We remain confident in our full year guidance as we continue to make progress on our transformation as a consumer-centric total beverage company."
Segment performance
Total units case volume inched up 2% in the first quarter as gains from key markets across Asia and Europe were only partly offset by declines in Argentina, the Middle East and North America. On the other hand, sales at its water, enhanced water and sports drinks unit climbed a combined 6% in the reported quarter.
Geographically, ales rose 1% in North America and 5% in the Europe, Middle East and Africa (EMEA) segment. By contrast, the company saw revenue declines in its Asia Pacific (down 2%) and Latin America (down 10%) segments. Revenue grew a mammoth 201% for Global Ventures in the reported quarter.
Organic revenues grew across all regions because of regular innovation and revenue growth programs within sparkling soft drinks along with solid pricing and mix. Organic sales jumped 1% in North America, 1% in Global Ventures and 14% in the EMEA region.
Financial forecast
The beverage company forecasted that comparable earnings would be end fiscal 2019 in a range of a 1% increase to 1% decrease.The company projects adjusted revenue will grow by 4% in fiscal 2019. Further, it expects that its comparable currency neutral operating income will surge 10-11% for the same period. While operating cash flow is expected to be at least $8 billion, capital spending is anticipated to be around $2 billion.
The company suffered from unfavorable foreign exchange rates as well as bottler refranchising activities last year. However, it is not likely to face negative effects from refranchising efforts this year, as most has already been completed. This is likely to ensure better margins coupled with lower expenses.
The Costa acquisition
Coca-Cola acquired Costa, a British coffee chain, valued at $5.1 billion in the first quarter. The company plans to introduce ready-to-drink products under Costa in the second quarter of the year.
Disclosure: I do not hold any position in the stock mentioned.
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