01—Abstract
Summary
Summary of the 10-K filed February 24, 2020. Cited figures are marked; the original filing is the authoritative source.
Coca-Cola Company's (KO) 2019 10-K filing highlights a robust global presence with over 500 nonalcoholic beverage brands across five key categories: sparkling soft drinks, water/enhanced water/sports drinks, juice/dairy/plant-based beverages, tea/coffee, and energy drinks.
The company emphasizes its extensive distribution network, reaching consumers in over 200 countries through independent bottling partners. A significant portion of net operating revenues comes from concentrate operations, with finished product operations contributing the remainder. The filing also details the company's strategic focus on disciplined portfolio growth, an aligned bottling system, and stakeholder engagement, supported by digital transformation and sustainability initiatives.
Key financial highlights for 2019 include net operating revenues of $37.266 billiona, a consolidated net income of $8.985 billion, and diluted earnings per share of $2.07. Coca-Cola continued its shareholder return strategy by paying significant dividends and repurchasing shares.
The company faced challenges such as evolving consumer preferences, health concerns (particularly obesity), and increased competition, but expressed confidence in its ability to adapt and innovate. The report also addresses potential risks including foreign currency fluctuations, increased indirect taxes, and ongoing tax disputes with the IRS, while noting the early stages of impact from COVID-19 in China.
02—Key points
Key Highlights
- Coca-Cola operates as the world's largest nonalcoholic beverage company with over 500 brands across five major categories.
- Net operating revenues for 2019 reached $37.266 billion, with consolidated net income at $8.985 billion.
- The company reported diluted earnings per share of $2.07 for the year ended December 31, 2019.
- Coca-Cola's global reach extends to over 200 countries through a vast network of independent bottling partners.
- Sparkling soft drinks, particularly the 'Trademark Coca-Cola' brand, remain the largest volume drivers, accounting for 69% and 45% of worldwide unit case volume, respectively.
- The company returned significant value to shareholders through dividends totaling $6.845 billion and share repurchases.
- Key risks identified include evolving consumer preferences, health concerns related to sugar-sweetened beverages, increased competition, and foreign currency exchange rate fluctuations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Coca Cola Co kept $0.24.
- Revenue$37.27B100.0%
- Cost of revenue−$14.62B39.2%
- Gross profit$22.65B60.8%
- Operating costs−$12.56B33.7%
- Operating income$10.09B27.1%
- Interest, other & tax−$1.17B3.1%
- Net income$8.92B23.9%
Where FY2019 revenue went
$37.27B- Cost of revenue: $14.62B, 39% of revenue
- SG&A: $12.10B, 32% of revenue
- Net income: $8.92B, 24% of revenue
- Other operating costs: $458.0M, 1.2% of revenue
- Interest, other & tax: $1.17B, 3.1% of revenue
Kept 24% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 24, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $37.27B$34.30B | +8.6% |
| Cost of Revenue | $14.62B$13.07B | +11.9% |
| Gross Profit | $22.65B$21.23B | +6.7% |
| SG&A Expenses | $12.10B$11.00B | +10.0% |
| Operating Income | $10.09B$9.15B | +10.2% |
| Interest Expense | $946.00M$950.00M | −0.4% |
| Net Income | $8.92B$6.43B | +38.6% |
| EPS (Basic) | $2.09$1.51 | +38.4% |
| EPS (Diluted) | $2.07$1.50 | +38.0% |
| Shares Outstanding (Basic) | 4.28B4.26B | +0.4% |
| Shares Outstanding (Diluted) | 4.31B4.30B | +0.3% |
05—Questions
Frequently Asked Questions
What were Coca-Cola's main revenue streams in 2019?
In 2019, Coca-Cola's net operating revenues were primarily derived from concentrate operations (55%) and finished product operations (45%). The company sells concentrates and syrups to bottling partners globally, which then manufacture and distribute finished beverages.
What is Coca-Cola's strategy for growth?
Coca-Cola's growth strategy is centered around disciplined portfolio growth through continuous innovation and acquisitions, an aligned and engaged bottling system focused on value growth, and winning with stakeholders. Key enablers for this strategy include digitizing the enterprise, fostering a growth culture, and growing sustainably.
What are the key risks facing Coca-Cola according to the filing?
Key risks identified include evolving consumer preferences (health, wellness, sustainability), increased competition, product safety and quality concerns, ingredient quality and quantity (especially water scarcity), and fluctuations in foreign currency exchange rates. The company also highlighted potential impacts from global events like the COVID-19 outbreak, which began affecting operations in China in early 2020.
How does Coca-Cola manage its relationship with bottling partners?
Coca-Cola manages its relationships with approximately 200 independent bottling partners through bottler's agreements. These agreements authorize bottlers to manufacture and sell Company Trademark Beverages within specific territories. The company also works closely with these partners on pricing models, marketing, and innovation to ensure alignment and mutual growth.
06—Continue