10-QPeriod: Q2 FY2021

COCA COLA CO Quarterly Report for Q2 Ended Apr 2, 2021

Filed April 27, 2021For Securities:KO

Summary

The Coca-Cola Company reported its first-quarter 2021 financial results, showing an increase in net operating revenues to $9.02 billion, up 5% year-over-year, driven by a 5% growth in concentrate sales volume. This growth was partially offset by unfavorable price, product, and geographic mix, as well as a 1% negative impact from foreign currency fluctuations. Net income attributable to shareowners decreased to $2.245 billion ($0.52 per share) from $2.775 billion ($0.64 per share) in the prior year quarter, reflecting higher operating costs and charges, including increased interest expense and strategic realignment initiatives. The company continued to navigate the impacts of the COVID-19 pandemic, which affected consumer behavior and sales channels. Despite these challenges, Coca-Cola demonstrated resilience, with strong performance in key markets like Asia Pacific and Latin America. The company's liquidity position remained strong, with $8.48 billion in cash and cash equivalents, and management expressed confidence in its ability to fund operations and capital expenditures.

Financial Highlights

52 data points
Beta

Revenue

$9.02B

61.1% Gross Margin

Net Income

$2.25B

24.9% Net Margin

EPS (Diluted)

$0.52

Total Assets

$89.99B

Cash & Equivalents

$8.48B

Free Cash Flow

$1.42B

Financial Statements
Beta
Revenue$9.02B
Cost of Revenue$3.50B
Gross Profit$5.51B
SG&A Expenses$2.67B
Operating Income$2.72B
Interest Expense$442.00M
Net Income$2.25B
EPS (Basic)$0.52
EPS (Diluted)$0.52
Shares Outstanding (Basic)4.31B
Shares Outstanding (Diluted)4.33B

Key Highlights

  • 1Net operating revenues increased by 5% to $9.02 billion compared to the prior year quarter.
  • 2Worldwide concentrate sales volume grew by 5%, indicating increased demand for core products.
  • 3Net income attributable to shareowners decreased by 19% to $2.245 billion, impacted by various charges and mix shifts.
  • 4Diluted Earnings Per Share (EPS) decreased to $0.52 from $0.64 in the prior year period.
  • 5The company reported significant charges related to strategic realignment initiatives and debt extinguishment, impacting profitability.
  • 6Cash and cash equivalents increased to $8.48 billion, demonstrating a strong liquidity position.
  • 7The company's operating segments showed varied performance, with Asia Pacific and North America showing notable revenue growth, while Europe, Middle East & Africa saw a decline.

Frequently Asked Questions

The primary driver of the revenue increase was a 5% growth in worldwide concentrate sales volume. This indicates an underlying increase in demand for Coca-Cola's products at the consumer level, despite ongoing impacts from the COVID-19 pandemic.

Net income decreased due to several factors, including higher operating expenses, increased interest expense related to debt extinguishment and hedging activities, and charges associated with strategic realignment initiatives. Additionally, unfavorable price, product, and geographic mix, along with foreign currency fluctuations, also impacted profitability.

The pandemic continues to influence consumer behavior, shifting demand towards at-home consumption and away from away-from-home channels like restaurants and public venues. This has led to unfavorable channel and product mix, impacting overall profitability. However, the company is adapting by increasing e-commerce investments and focusing on core brands and relevant packaging.

The company is actively involved in litigation with the IRS regarding transfer pricing tax adjustments for tax years 2007-2009. While a Tax Court opinion predominantly sided with the IRS, Coca-Cola believes its positions will be sustained on appeal. The potential liability remains significant, estimated at around $12 billion, but the company maintains it has sufficient liquidity and borrowing capacity to manage the outcome.