Coca-Cola sales beat estimates as China volumes soar
BEIJING: Coca-Cola Co reported better-than-expected quarterly revenue as strong sales in China more than offset a drop in Europe and flat volumes in North America.
Coke's shares, which had fallen 3.4 per cent in the 12 months to Monday's close, were up 3 per cent in early trading.
Global case volumes rose 2 per cent in the quarter, while those in China rose 12 per cent due to increased marketing around the Chinese New Year, the company said on Tuesday. Coke does not break out China sales separately. The business falls under its Asia-Pacific region, the company's second-biggest market by revenue. In 2013, the region accounted for 13 per cent of overall sales.
Sales in North America, the company's biggest market, were stable despite an unusually cold winter and the general consumer shift away from fizzy drinks.
"Our North America Group delivered even volume versus the prior year quarter while gaining value share and maintaining volume share," the company said in a statement.
Sales declined 4 per cent in Europe, but rose 6 per cent in both India and Russia.
"We're beginning to get our momentum back...," chief executive Muhtar Kent said on CNBC.
Kent has been trying to boost profits by cutting costs, developing its non-soda brands and getting into new businesses.
The company bought a 10 per cent stake in single-cup coffee brewer Keurig Green Mountain Inc - known for its K-cups in February to help compete in the home soda-making market, dominated by Israel-based Sodastream International Ltd.
The partnership is looking to develop machines to dispense cold drinks such as juices and teas. Coke owns the Minute Maid juice brand and Honest Tea.
Coke has said it would invest cost savings in advertising and marketing to drive sales in 2014.
RBC Capital Markets analyst Nik Modi said Coke's global volume growth was "particularly impressive" in a quarter marked by harsh weather, a strong dollar and the effects of tensions between Russia and United States.
"From here, we believe volumes will continue to accelerate ...," Modi wrote in the note.
The company's net income attributable to shareholders fell to $1.62 billion, or 36 cents per share, in the first quarter ended March 28 from $1.75 billion, or 39 cents per share, a year earlier.
Excluding items, earnings were 44 cents per share, matching the average analyst estimate.
Revenue fell 4 per cent to $10.58 billion. Analysts on average were expecting $10.55 billion, according to Thomson Reuters.
Separately, Wintergreen Advisers LLC, which says it owns more than 2.5 million Coke shares, sent a letter to the company's top investors on Tuesday, urging them to review Coke's equity compensation plan before the annual meeting on April 23.
Wintergreen Chief Executive David Winters called the equity plan "deeply flawed" and said Coke may need to spend $2 billion per year to offset the dilution caused by the plan.
Winters has previously said the plan, when combined with existing equity awards, could dilute shareholders' interests by more than 14.2 per cent.
Coca-Cola shares were trading at $39.91 shortly after the market opened.
Coke's shares, which had fallen 3.4 per cent in the 12 months to Monday's close, were up 3 per cent in early trading.
Global case volumes rose 2 per cent in the quarter, while those in China rose 12 per cent due to increased marketing around the Chinese New Year, the company said on Tuesday. Coke does not break out China sales separately. The business falls under its Asia-Pacific region, the company's second-biggest market by revenue. In 2013, the region accounted for 13 per cent of overall sales.
Sales in North America, the company's biggest market, were stable despite an unusually cold winter and the general consumer shift away from fizzy drinks.
"Our North America Group delivered even volume versus the prior year quarter while gaining value share and maintaining volume share," the company said in a statement.
Sales declined 4 per cent in Europe, but rose 6 per cent in both India and Russia.
"We're beginning to get our momentum back...," chief executive Muhtar Kent said on CNBC.
Kent has been trying to boost profits by cutting costs, developing its non-soda brands and getting into new businesses.
The company bought a 10 per cent stake in single-cup coffee brewer Keurig Green Mountain Inc - known for its K-cups in February to help compete in the home soda-making market, dominated by Israel-based Sodastream International Ltd.
The partnership is looking to develop machines to dispense cold drinks such as juices and teas. Coke owns the Minute Maid juice brand and Honest Tea.
Coke has said it would invest cost savings in advertising and marketing to drive sales in 2014.
RBC Capital Markets analyst Nik Modi said Coke's global volume growth was "particularly impressive" in a quarter marked by harsh weather, a strong dollar and the effects of tensions between Russia and United States.
"From here, we believe volumes will continue to accelerate ...," Modi wrote in the note.
The company's net income attributable to shareholders fell to $1.62 billion, or 36 cents per share, in the first quarter ended March 28 from $1.75 billion, or 39 cents per share, a year earlier.
Excluding items, earnings were 44 cents per share, matching the average analyst estimate.
Revenue fell 4 per cent to $10.58 billion. Analysts on average were expecting $10.55 billion, according to Thomson Reuters.
Separately, Wintergreen Advisers LLC, which says it owns more than 2.5 million Coke shares, sent a letter to the company's top investors on Tuesday, urging them to review Coke's equity compensation plan before the annual meeting on April 23.
Wintergreen Chief Executive David Winters called the equity plan "deeply flawed" and said Coke may need to spend $2 billion per year to offset the dilution caused by the plan.
Winters has previously said the plan, when combined with existing equity awards, could dilute shareholders' interests by more than 14.2 per cent.
Coca-Cola shares were trading at $39.91 shortly after the market opened.
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