01—Abstract
Summary
Summary of the 10-K filed February 24, 2017. Cited figures are marked; the original filing is the authoritative source.
In its 2016 10-K filing, The Coca-Cola Company (KO) reported a net operating revenue of $41.86 billiona, a decrease of 5% from the previous year, primarily attributed to structural changes like bottler refranchising and adverse currency fluctuations.
The company continued to emphasize its global beverage leadership, operating in over 200 countries with a portfolio of over 500 brands. Key financial highlights included a diluted net income per share of $1.49b and robust cash flow from operations of $8.8 billion, which supported significant investments and dividend payouts. The company highlighted its ongoing strategic priorities, including accelerating brand portfolio growth, driving revenue growth led by sparkling beverages, strengthening the Coca-Cola system, digitizing the enterprise, and unlocking the power of its people.
Management acknowledged challenges such as evolving consumer preferences, increased competition, and health concerns related to obesity, while detailing efforts to offer healthier options and communicate transparently. The report also detailed the significant impact of refranchising bottling operations in North America and China, which affected reported revenues and segment profitability but was presented as a strategic move to enhance long-term brand value and system efficiency.
02—Key points
Key Highlights
- Net operating revenues for 2016 were $41.86 billion, a 5% decrease from 2015, impacted by structural changes and currency fluctuations.
- Diluted net income per share was $1.49 in 2016.
- Cash flow from operations remained strong at $8.8 billion for 2016.
- The company is actively refranchising its North American bottling operations, a strategic move impacting segment revenues and profits but aimed at long-term efficiency and brand focus.
- Key strategic priorities include accelerating brand portfolio growth, driving revenue led by sparkling beverages, and digitizing the enterprise.
- The company acknowledged consumer trends towards health and wellness, highlighting efforts to offer reduced-, low-, or no-calorie options and provide transparent nutrition information.
- Significant charges were recorded related to productivity initiatives, bottling operation integration, and refranchising efforts, impacting operating income.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Coca Cola Co kept $0.16.
- Revenue$41.86B100.0%
- Cost of revenue−$16.46B39.3%
- Gross profit$25.40B60.7%
- Operating costs−$16.74B40.0%
- Operating income$8.66B20.7%
- Interest, other & tax−$2.13B5.1%
- Net income$6.53B15.6%
Where FY2016 revenue went
$41.86B- Cost of revenue: $16.46B, 39% of revenue
- SG&A: $15.37B, 37% of revenue
- Net income: $6.53B, 16% of revenue
- Other operating costs: $1.37B, 3.3% of revenue
- Interest, other & tax: $2.13B, 5.1% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 24, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $41.86B$44.29B | −5.5% |
| Cost of Revenue | $16.46B$17.48B | −5.8% |
| Gross Profit | $25.40B$26.81B | −5.3% |
| SG&A Expenses | $15.37B$16.43B | −6.4% |
| Operating Income | $8.66B$8.73B | −0.8% |
| Interest Expense | $733.00M$856.00M | −14.4% |
| Net Income | $6.53B$7.35B | −11.2% |
| EPS (Basic) | $1.51$1.69 | −10.7% |
| EPS (Diluted) | $1.49$1.67 | −10.8% |
| Shares Outstanding (Basic) | 4.32B4.35B | −0.8% |
| Shares Outstanding (Diluted) | 4.37B4.41B | −0.9% |
05—Questions
Frequently Asked Questions
What was the overall financial performance of Coca-Cola in 2016?
In 2016, Coca-Cola reported net operating revenues of $41.86 billion, a 5% decrease compared to 2015. Diluted net income was $1.49 per share. The company generated substantial cash flow from operations ($8.8 billion), which supported its strategic initiatives, dividend payments, and share repurchases.
What are Coca-Cola's main strategic priorities as outlined in the 10-K?
The company's strategic priorities for 2016 included accelerating the growth of its consumer-centric brand portfolio, driving revenue growth with a focus on sparkling beverages, strengthening the overall Coca-Cola system, digitizing the enterprise, and unlocking the potential of its workforce. These strategies aim to enhance competitiveness and drive long-term shareholder value.
How did refranchising of bottling operations affect the company's financial results?
The refranchising of bottling operations, particularly in North America and China, had a significant impact on Coca-Cola's financial results. While it led to a decrease in reported net operating revenues and affected segment profitability due to the sale of assets and derecognition of intangible assets, it was presented as a strategic move to refocus on brand building, improve system efficiency, and enhance long-term value. The company recorded substantial charges related to these refranchising efforts.
What are the key risks and challenges highlighted in the filing?
The company highlighted several key risks and challenges, including evolving consumer preferences (driven by health and wellness concerns), intense competition in the beverage market, water scarcity and quality issues, product safety and quality concerns, and the impact of global economic and political conditions. Additionally, the company faces risks related to foreign currency fluctuations, potential increases in indirect taxes, and managing its relationships with bottling partners.
06—Continue