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
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Published on Apr 18, 2012
By Jay Hawk