ATLANTA: By and large things are looking up for Coke, but CEO Muhtar Kent says more improvement will come as his growth plan, announced in October 2014, takes hold. The plan includes a simplified operating model with a greater focus on local markets, a renewed marketing push and a revenue based incentive plan.
Echoing past statements on the turnaround he said, “Though we are still in the early stages, we see some initial positive indicators that we have the right strategies in place to accelerate growth. However, we continue to view 2015 as a transition year as the benefits from the announced initiatives will take time to fully materialize amidst an uncertain and volatile macroeconomic environment. We remain committed to leveraging our superior brand portfolio together with our unparalleled global distribution system to continue creating long-term shareowner value.”
The Coca-Cola KO +1.52% Company reported $10.7 billion in first quarter revenue, up about a percent from the same period last year. The modest growth is surely a relief to shareholders who saw Coke’s sales declined in the first, second and fourth quarters of 2014 and stand still in the third quarter. The result was a 2% revenue decline for the year.
Also promising is that net income declined just 4% year-over-year in the first quarter of 2015 to $1.56 billion. Profit took a 55% hit in the fourth quarter of last year, a 14% hit in the third and suffered single digit declines in the first and second quarters.
At 48 cents, adjusted earnings per share were up 4 cents from year prior’s results and 6 cents ahead of Wall Street analysts’ consensus estimate. However, if you add back items the company separated out like turnaround costs, charges related to long term woes in Venezuela and other currency impacts that have hit many multinationals, reported earnings per share were just 35 cents, down a penny from a year earlier.
Unit case volume grew 1% for the quarter, overall still and sparkling beverage volumes each growing 1%. While volume grew for most of the company’s classic soda brands — including namesake Coca-Cola, Coke Zero, Sprite and Fanta — Diet Coke offset gains with a 6% decline.
Back in October Coca-Cola said it expects long term earnings per share growth in the high single-digits and net revenue growth in the mid single-digits and that the company will have a profit before tax target of 6% to 8%. However in the nearer future the company anticipated results to come in below these targets. For 2015 Coke now expects adjusted earnings per share growth in the mid-single digits.
Coca-Cola shares were up more than 2% to around $41.60 in pre-market trading Wednesday. Shares were down 3.4% year-to-date prior to the morning pop and the gains so far will not bring the stock back up to its start of year level. Futures shares of rival PepsiCo PEP +0.74% were flat before the opening bell at $96.78 and are up 2.4% year-to-date. Pepsi will report first quarter earnings Thursday, April 23
