Coca Cola Opens Earnings Season with a Bang (KO)

Shares of the world's largest soft drink maker, Coca Cola Company (KO: Charts, News) rose on Tuesday after the Atlanta, GA based company reported better than expected first quarter earnings. Coca Cola stock - a component of the Dow Jones Industrial Average - closed up +1.51 points or +2.08 percent on Tuesday, to $73.95 per share, leading the rest of the market higher.

In addition to reporting positive earnings, Coca Cola also announced a major cost cutting plan that would potentially save the company $550 million to $650 million over the next four years. The company plans to reinvest some of the money it will save in marketing and to counter rising commodity prices. Coca Cola, which distributes soft drinks in 200 countries around the world, continues to expand its sales volume, with overall global volume having increased by five percent in the first quarter. The company also reported a gain in sales in each of its geographical operating areas. Daily Chart
Coca Cola reported net income for the quarter ended March 31st of $2.05 billion, or $0.89 per diluted share, versus $1.9 billion or $0.82 in the same quarter one year ago, an increase of +7.9 percent. Revenue for the quarter also increased to $11.1 billion a six percent increase from its results last year. Analysts surveyed by Zacks Investment Research expected earnings to be $0.88 per share on revenue of $10.8 billion. After the earnings release, Coca Cola's Chairman and CEO, Muhtar Kent stated that, "Despite a continued mixed global environment, our hardworking teams achieved broad-based volume and value share gains in nonalcoholic ready-to-drink beverages globally, with volume growth across every geographic operating group and revenue growth ahead of our long-term growth target." As far as Coca Cola's future outlook, Kent said that, "We are highly focused on creating value for our consumers, customers, communities and investors through our clear roadmap for growth, investments in our world-class brands, a productivity and reinvestment program that is driving efficiencies, and a global bottling system that is well-aligned for execution." Kent has introduced smaller package sizes in an attempt to increase sales for North American customers, where the soft drink industry has been declining for the last seven years. The North American unit's sales increased by two percent in the quarter thanks to increased sales of Dasani water and Powerade energy drinks. In addition to the two percent increase in the North American unit's sales, which accounts for 44 percent of global sales, the Pacific unit, its second largest, had sales increase by eight percent, boosted by a three percent increase in Japan. Sales in emerging markets also increased significantly, with India topping the list increasing by 20 percent in the quarter, while sales in China increased by nine percent and Brazil four percent. With a global recession underway, apparently people around the world continue to enjoy drinking Coca Cola. Few international companies can claim they have prospered in the years since the beginning of the economic turmoil which began in 2008. Coca Cola's performance has consistently improved despite economic conditions, making the stock an excellent hedge for both inflation and an economic downturn. Other News About KO Coca-Cola Expanding Reach Worldwide for Profit Article highlighting Coke's marketing smaller size packages. Coca-Cola Profit Up 7.9% WSJ article on earnings. Other Stocks in the News Nestl Is Near Deal for Pfizer Infant Unit Pfizer near deal to acquire Nestle's infant nutrition business for $9 billion. IBM Earnings Rise, but Sales Flatline IBM's stock slips after earnings report. Copyright 2012 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Apr 18, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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