Vending

Coca-Cola Q4 2020 sales clipped by resurging COVID-19 lockdowns

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February 10, 2021

Revenue declined 5% for the Coca Cola Co. in the fourth quarter ending Dec. 31, 2020, dropping to $8.6 billion as a resurgence in the coronavirus drove renewed lockdowns, according to an earnings presentation.

The company's global progress remained mixed in the quarter.

Organic revenues (non-GAAP) declined 3%, driven by a 3% decline in price/mix while concentrate sales were even.

The quarter included two additional days, which resulted in an approximate two-point benefit to revenue growth. The company continued to see improvement in trends compared to prior quarters.

Earnings per share for the fourth quarter declined 29% to 34 cents and comparable EPS (non-GAAP) grew 6% to 47 cents.

The revenue missed analyst expectations of $8.7 billion, but the earnings surpassed Wall Street expectations, according to an Associated Press report.

For the year, net revenues declined 11% to $33.0 billion while organic revenues (non-GAAP) declined 9%, driven by a 7% decline in concentrate sales and a 2% decline in price/mix. EPS declined 13% to $1.79 while comparable EPS (non-GAAP) declined 8% to $1.95.

Shares traded at $49.90 today against a 52-week range of $36.64-$58.14.

"The progress we made in 2020, including the actions taken to accelerate the transformation of our company, gives us confidence in returning to growth in the year ahead," James Quincey, chairman and CEO of the company, said in the press release. "While near-term uncertainty remains, we are well-positioned to emerge stronger from the crisis, driven by our purpose and our beverages for life ambition."

Global unit case volume trends remained closely linked to consumer mobility and the health of away-from-home channels in the fourth quarter. While volume trends have broadly remained resilient amidst the continuing uncertainty surrounding the coronavirus pandemic, the company experienced incremental pressure in December and into the early part of this year due to a resurgence of the coronavirus in many parts of the world.

Through early February 2021, the company has experienced a volume decline of mid single digits globally, with continued elevated levels of sales in at-home channels being more than offset by pressure in away-from-home channels.

During the year, the company prioritized core brands, which resulted in Trademark Coca-Cola volume growing 1% for the quarter, led by Coca-Cola Zero Sugar with volume growth of 3% for the quarter and 4% for the full year.

In away-from-home channels, the company developed multi-serve takeout bundles for drive-through channels and innovated with touchless Freestyle equipment.

In digital channels, the company continued to invest in omnichannel opportunities. For example, the company capitalized on the booming trend of retail online-to-offline in China.

Continued strength in at-home channels was more than offset by coronavirus-related pressure in away-from-home channels. While developing and emerging markets remained resilient in the quarter, developed markets continued to be under pressure.

Category cluster performance was as follows:

Sparkling soft drinks declined 1% for the quarter and 4% for the year. For both the quarter and the full year, the decline was primarily due to pressure in the fountain business in North America and away-from-home channels in Western Europe due to the coronavirus pandemic. This was partially offset by growth in China, Brazil and Nigeria.

Trademark Coca-Cola grew 1% for the quarter and declined 1% for the year. Trademark Coca-Cola growth in the quarter was driven by positive performance in most operating groups.

Coca-Cola Zero Sugar grew 3% for the quarter and 4% for the year.

Juice, dairy and plant-based beverages declined 2% for the quarter and 9% for the year, as solid performance by Simply and fairlife in North America was more than offset by a decline in Minute Maid in the fountain business..

Water, enhanced water and sports drinks declined 9% for the quarter and 11% for the year, led by a broad-based decline across operating groups, primarily due to a decline in lower-margin water brands.

Tea and coffee declined 15% for the quarter and 17% for the year, primarily driven by coronavirus-related pressure on Costa retail stores, along with pressure on the doğadan tea business in Turkey.

Going forward, the company expects to deliver organic revenue (non-GAAP) percentage growth of high single digits.

For comparable net revenues (non-GAAP), the company expects a 2% to 3% currency tailwind based on the current rates and including the impact of hedged positions. The company expects to deliver comparable EPS (non-GAAP) percentage growth of high single digits to low double digits versus $1.95 in 2020.

For an update on how the coronavirus pandemic is affecting convenience services, click here.