Global Unit Case Volume Grew 6%
Net Revenues Grew 16%; Organic Revenues
(Non-GAAP) Grew 14%
Operating Income Grew 26%; Comparable Currency
Neutral Operating Income (Non-GAAP) Grew 11%
Operating Margin Was 28.9% Versus 26.6% in the
Prior Year; Comparable Operating Margin (Non-GAAP) Was 30.0% Versus
30.4% in the Prior Year
EPS Grew 41% to $0.57; Comparable EPS
(Non-GAAP) Grew 18% to $0.65
The Coca-Cola Company today reported strong third quarter 2021
results and year-to-date performance. “Our strategic transformation
is enabling us to effectively navigate a dynamic environment and
emerge stronger from the pandemic,” said James Quincey, Chairman
and CEO of The Coca-Cola Company. “We are updating our full-year
guidance to reflect another quarter of momentum in the business.
While the recovery continues to be asynchronous around the world,
we are investing for growth to drive long-term value for the
system. Our strong system alignment and networked organization are
helping us unlock enormous potential in our brands and across our
markets.”
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20211027005297/en/
Highlights
Quarterly Performance
- Revenues: Net revenues grew 16% to $10.0 billion,
resulting in net revenues ahead of 2019, and organic revenues
(non-GAAP) grew 14%. Revenue performance included 8% growth in
concentrate sales and 6% growth in price/mix. Revenue growth was
broad-based with particular strength in markets where
coronavirus-related uncertainty is abating.
- Margin: Operating margin, which included items impacting
comparability, was 28.9% versus 26.6% in the prior year, while
comparable operating margin (non-GAAP) was 30.0% versus 30.4% in
the prior year. Comparable operating margin (non-GAAP) compression
was primarily driven by a significant increase in marketing
investments versus the prior year, partially offset by strong
revenue growth.
- Earnings per share: EPS grew 41% to $0.57, and
comparable EPS (non-GAAP) grew 18% to $0.65. Comparable EPS
(non-GAAP) growth included the impact of a 3-point currency
tailwind.
- Market share: The company gained value share in total
nonalcoholic ready-to-drink (NARTD) beverages, which included share
gains in both at-home and away-from-home channels. The company’s
value share in total NARTD beverages remains ahead of the 2019
level.
- Cash flow: Year-to-date cash flow from operations was
$9.2 billion, up $3.0 billion versus the prior year, driven by
strong business performance, five additional days in the first
quarter and working capital initiatives. Year-to-date free cash
flow (non-GAAP) was $8.5 billion, up $3.0 billion versus the prior
year, driven by strong cash flow from operations.
Company Updates
- Business environment: Global unit case volume continued
to benefit from ongoing recovery in many markets. Third quarter
volume was ahead of 2019, and there was sequential improvement in
volume versus the second quarter on a two-year basis driven by
improved performance in away-from-home channels along with
continued strength in at-home channels. While recovery continues to
look different across markets and the supply chain environment
remains dynamic, the company is progressing on its strategic
transformation and is leveraging the networked organization to
drive growth for the system.
- Engaging and attracting consumers through a new platform for
Trademark Coca-Cola: The company has launched a new brand
platform for Trademark Coca-Cola called “Real Magic,” the first in
five years. The “Real Magic” brand philosophy is rooted in the
insight that magic lives in unexpected moments of connection that
elevate the everyday into the extraordinary. The platform includes
a new design identity for the trademark, including a fresh
expression called the Coca-Cola “Hug” logo. The company will engage
consumers with experiences anchored in consumption occasions, such
as meals and breaks, and aligned with consumer passion points like
music, gaming and sports. The company launched the “Real Magic”
platform with the “One Coke Away From Each Other” campaign, which
runs through October and includes social, digital and out-of-home
executions.
- Commitment to a World Without Waste: In 2018, the
company launched the World Without Waste strategy, renewing a focus
on creating a circular economy for plastic packaging and
eliminating waste in the environment. In line with this strategy,
the company made important changes to its policies, goals and
partnerships. The company remains committed to being part of the
solution to the plastics pollution problem and has made progress,
but there is still much more to do. In a recently released report
on plastic pollution from As You Sow, the company scored the
highest (out of 50 companies) for its efforts in reducing plastic
pollution, including its strong commitment to recycling,
transparency for its packaging use and support for producer
responsibility initiatives. Earlier this month, the company
revealed a breakthrough prototype bottle – its first to be made
from 100% plant-based plastic (bPET), excluding cap and label,
produced using technologies that are intended to be commercially
scaled and that have a lower carbon footprint than virgin oil-based
plastics. Additionally, the system continues to make key
investments to ensure access to recycled-content packaging
material. The company’s bottling partner in Indonesia and Dynapack
Asia announced the construction of a PET recycling facility in West
Java that will create a closed-loop plastic packaging supply
chain.
- Leveraging a streamlined portfolio to fuel the innovation
pipeline: The company is building a strong innovation pipeline
that leverages big bets as well as intelligent experimentation. The
networked organization is lifting and shifting several local and
regional brands to additional markets around the world, including
Costa® ready-to-drink, in the key markets of Japan and China, and
the dairy brand fairlife™ in China. The scaled launch of new and
improved Coca-Cola® Zero Sugar has resulted in an increase in key
consumer metrics and contributed approximately 25% of Trademark
Coca-Cola’s growth in the third quarter. The company also continues
to be consumer centric by using intelligent experimentation at the
local market level, including the launch of Aquarius® with
functional benefits and the extension of the Ayataka® tea brand
with Ayataka Cafè in Japan.
Operating Review – Three
Months Ended October 1, 2021
Revenues
and Volume
Percent Change
Concentrate Sales1
Price/Mix
Currency Impact
Acquisitions, Divestitures and
Structural Changes, Net
Reported Net Revenues
Organic Revenues2
Unit Case Volume
Consolidated
8
6
2
0
16
14
6
Europe, Middle East & Africa
8
5
0
0
13
13
8
Latin America
11
23
7
0
41
33
8
North America
7
5
0
0
13
13
4
Asia Pacific
5
(3)
2
0
3
2
3
Global Ventures3
20
19
8
0
47
39
15
Bottling Investments
3
6
4
0
13
9
3
Operating Income and EPS
Percent Change
Reported Operating Income
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated
26
12
3
11
Europe, Middle East & Africa
14
4
0
10
Latin America
48
8
10
30
North America
19
6
0
13
Asia Pacific
5
5
2
(2)
Global Ventures
—4
—
—
—
Bottling Investments
48
(33)
41
41
Percent Change
Reported EPS
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated EPS
41
24
3
14
Note: Certain rows may not add due to rounding.
1
For Bottling Investments, this represents
the percent change in net revenues attributable to the increase
(decrease) in unit case volume computed based on total sales
(rather than average daily sales) in each of the corresponding
periods after considering the impact of structural changes, if
any.
2
Organic revenues, comparable currency
neutral operating income and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3
Due to the combination of multiple
business models in the Global Ventures operating segment, the
composition of concentrate sales and price/mix may fluctuate
materially on a periodic basis. Therefore, the company places
greater focus on revenue growth as the best indicator of underlying
performance of the Global Ventures operating segment.
4
Reported operating income for Global
Ventures for the three months ended October 1, 2021 was $114
million. Reported operating loss for Global Ventures for the three
months ended September 25, 2020 was $31 million. Therefore, the
percent change is not meaningful.
In addition to the data in the preceding tables, operating
results included the following:
Consolidated
- Unit case volume grew 6% in the quarter, resulting in volume
ahead of 2019, primarily led by developing and emerging markets.
This was driven by ongoing recovery in markets where
coronavirus-related uncertainty is abating, along with the benefit
from cycling the impact of the pandemic last year. Growth in
developing and emerging markets was led by India, Russia and
Brazil, while growth in developed markets was led by the United
States, Great Britain and Mexico.
Category performance was as follows:
- Sparkling soft drinks grew 6%, resulting in volume ahead of
2019, driven by strong performance across all geographic operating
segments. Trademark Coca-Cola grew 5%, resulting in volume ahead of
2019, led by Europe, Middle East & Africa and Latin America.
Sparkling flavors grew 7%, resulting in even performance on a
two-year basis, led by solid growth in both Trademark Sprite and
Trademark Fanta.
- Nutrition, juice, dairy and plant-based beverages grew 12%, a
low single-digit acceleration versus 2019, due to solid performance
by Minute Maid® Pulpy in China, Maaza® in India and Del Valle® in
Mexico.
- Hydration, sports, coffee and tea grew 6%. Hydration grew 5%,
with growth across all geographic operating segments. Sports drinks
grew 5%, resulting in volume ahead of 2019, primarily driven by the
United States and Mexico. Tea grew 4%, led by growth in Hajime™ in
Japan and Gold Peak® in the United States. Coffee grew 19%,
primarily driven by the ongoing reopening of Costa® retail stores
in the United Kingdom as coronavirus-related uncertainty continued
to abate.
- Price/mix grew 6% for the quarter, primarily driven by pricing
actions in the marketplace along with favorable channel and package
mix due to cycling the impact of the pandemic last year.
Concentrate sales were 2 points ahead of unit case volume in the
quarter, primarily attributable to bottler inventory build to
manage through near-term supply disruption. Year-to-date
concentrate sales were 5 points ahead of unit case volume,
primarily due to five additional days in the first quarter, along
with cycling the timing of shipments in the prior year.
Operating income grew 26%, which included items impacting
comparability and a 4-point currency tailwind. Comparable currency
neutral operating income (non-GAAP) grew 11%, driven by strong
organic revenue (non-GAAP) growth across all operating segments,
partially offset by a significant increase in marketing investments
versus the prior year.
Europe, Middle East &
Africa
- Unit case volume grew 8% in the quarter, a low single-digit
acceleration versus 2019, driven by ongoing recovery in markets
where coronavirus-related uncertainty is abating, along with the
benefit from cycling the impact of the pandemic last year. Growth
was led by Russia and Great Britain in Europe, Nigeria in Africa,
and Turkey in Eurasia and Middle East.
- Price/mix grew 5% for the quarter, driven by favorable channel
and package mix due to cycling the impact of the pandemic last
year, along with the timing of deductions. Year-to-date concentrate
sales were 6 points ahead of unit case volume, primarily due to
five additional days in the first quarter, along with cycling the
timing of shipments in the prior year.
- Operating income grew 14%, which included items impacting
comparability. Comparable currency neutral operating income
(non-GAAP) grew 10%, primarily driven by strong organic revenue
(non-GAAP) growth across all operating units, partially offset by a
significant increase in marketing investments versus the prior
year.
- The company gained value share in total NARTD beverages, which
included share gains across most categories.
Latin America
- Unit case volume grew 8% in the quarter, resulting in volume
ahead of 2019. On a two-year basis, away-from-home volume improved
sequentially versus the second quarter, while at-home volume
remained strong. Growth was led by Mexico, Brazil and Argentina,
driven by solid performance of Trademark Coca-Cola and the
hydration category.
- Price/mix grew 23%, driven by pricing actions in the
marketplace along with favorable channel and package mix. For the
quarter, concentrate sales were 3 points ahead of unit case volume,
primarily attributable to bottler inventory build to manage through
near-term supply disruption. Year-to-date concentrate sales were 6
points ahead of unit case volume, primarily due to five additional
days in the first quarter and the timing of shipments in the
current year.
- Operating income grew 48%, which included items impacting
comparability and a 12-point currency tailwind. Comparable currency
neutral operating income (non-GAAP) grew 30%, driven by strong
organic revenue (non-GAAP) growth, partially offset by nearly
doubling marketing investments versus the prior year.
- The company lost value share in total NARTD beverages as share
gains in Brazil and Argentina were more than offset by share losses
in Mexico and Bolivia.
North America
- Unit case volume grew 4% in the quarter. Growth was driven by
recovery in the fountain business as coronavirus-related
uncertainty continued to abate. Sparkling flavors and juice led the
growth during the quarter.
- Price/mix grew 5% for the quarter, primarily driven by pricing
actions in the marketplace, recovery in the fountain business and
away-from-home channels, and solid growth in juice and dairy
finished-goods brands. For the quarter, concentrate sales were 3
points ahead of unit case volume, primarily due to the timing of
shipments in the current year. Year-to-date concentrate sales were
3 points ahead of unit case volume, primarily due to five
additional days in the first quarter.
- Operating income grew 19%, which included items impacting
comparability. Comparable currency neutral operating income
(non-GAAP) grew 13%, driven by strong organic revenue (non-GAAP)
growth, partially offset by a significant increase in marketing
investments versus the prior year.
- The company gained value share in total NARTD beverages led by
recovery in away-from-home channels along with strong performance
in at-home channels for sparkling flavors, sports drinks and
dairy.
Asia Pacific
- Unit case volume grew 3% in the quarter, resulting in even
performance on a two-year basis. Growth was driven by India and
China, partially offset by pressure in Southeast Asia due to the
impact of the pandemic. Growth was led by Trademark Coca-Cola and
sparkling flavors.
- Price/mix declined 3%, negatively impacted by 3 points of
geographic mix due to growth in emerging and developing markets
outpacing developed markets. For the quarter, concentrate sales
were 2 points ahead of unit case volume, primarily attributable to
bottler inventory build to manage through near-term supply
disruption. Year-to-date concentrate sales were 4 points ahead of
unit case volume, primarily due to five additional days in the
first quarter and the timing of shipments in the current year.
- Operating income grew 5%, which included a 2-point currency
tailwind. Comparable currency neutral operating income (non-GAAP)
declined 2%, driven by a significant increase in marketing
investments versus the prior year, partially offset by solid
organic revenue (non-GAAP) growth.
- The company gained value share in total NARTD beverages driven
by share gains in Japan and the Philippines.
Global Ventures
- Net revenues grew 47% in the quarter, which included an 8-point
currency tailwind. Organic revenues (non-GAAP) grew 39%. Revenue
growth was primarily driven by the ongoing reopening of Costa
retail stores in the United Kingdom as coronavirus-related
uncertainty continued to abate.
- Operating income growth and comparable currency neutral
operating income (non-GAAP) growth were driven by strong organic
revenue (non-GAAP) growth.
Bottling Investments
- Unit case volume grew 3% in the quarter. Strong growth in India
and South Africa was partially offset by pressure in Southeast Asia
due to the impact of the pandemic.
- Price/mix grew 6%, driven by pricing and trade promotion
optimization in most markets, along with a benefit from category
and package mix.
- Operating income growth of 48% included a headwind from items
impacting comparability and a 32-point tailwind from currency.
Comparable currency neutral operating income (non-GAAP) grew 41%,
driven by solid organic revenue (non-GAAP) growth along with
effective cost management.
Operating Review – Nine Months
Ended October 1, 2021
Revenues
and Volume
Percent Change
Concentrate Sales1
Price/Mix
Currency Impact
Acquisitions, Divestitures and
Structural Changes, Net
Reported Net Revenues
Organic Revenues2
Unit Case Volume
Consolidated
13
5
2
0
20
18
8
Europe, Middle East & Africa
15
4
2
0
20
18
9
Latin America
13
12
(1)
0
25
26
7
North America
8
7
0
0
14
14
5
Asia Pacific
13
0
4
0
17
13
9
Global Ventures3
24
13
10
0
47
37
18
Bottling Investments
13
5
3
0
21
18
11
Operating Income and EPS
Percent Change
Reported Operating Income
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated
30
8
2
20
Europe, Middle East & Africa
16
(1)
2
15
Latin America
27
2
0
25
North America
63
36
0
26
Asia Pacific
18
2
6
11
Global Ventures
—4
—
—
—
Bottling Investments
142
37
(10)
115
Percent Change
Reported EPS
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated EPS
16
(10)
2
24
Note: Certain rows may not add due to rounding. 1
For Bottling Investments, this represents
the percent change in net revenues attributable to the increase
(decrease) in unit case volume computed based on total sales
(rather than average daily sales) in each of the corresponding
periods after considering the impact of structural changes, if
any.
2
Organic revenues, comparable currency
neutral operating income and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3
Due to the combination of multiple
business models in the Global Ventures operating segment, the
composition of concentrate sales and price/mix may fluctuate
materially on a periodic basis. Therefore, the company places
greater focus on revenue growth as the best indicator of underlying
performance of the Global Ventures operating segment.
4
Reported operating income for Global
Ventures for the nine months ended October 1, 2021 was $215
million. Reported operating loss for Global Ventures for the nine
months ended September 25, 2020 was $114 million. Therefore, the
percent change is not meaningful.
Outlook
The 2021 and 2022 outlook information provided below includes
forward-looking non-GAAP financial measures, which management uses
in measuring performance. The company is not able to reconcile full
year 2021 projected organic revenues (non-GAAP) to full year 2021
projected reported net revenues, full year 2021 projected
comparable net revenues (non-GAAP) to full year 2021 projected
reported net revenues, full year 2021 projected underlying
effective tax rate (non-GAAP) to full year 2021 projected reported
effective tax rate, full year 2021 projected comparable EPS
(non-GAAP) to full year 2021 projected reported EPS, full year 2022
projected comparable net revenues (non-GAAP) to full year 2022
projected reported net revenues, full year 2022 projected
comparable cost of goods sold (non-GAAP) to full year 2022
projected reported cost of goods sold, or full year 2022 projected
comparable EPS (non-GAAP) to full year 2022 projected reported EPS
without unreasonable efforts because it is not possible to predict
with a reasonable degree of certainty the actual impact of changes
in foreign currency exchange rates throughout 2021 and 2022; the
exact timing and amount of acquisitions, divestitures and/or
structural changes throughout 2021 and 2022; the exact timing and
amount of items impacting comparability throughout 2021 and 2022;
and the actual impact of changes in commodity costs throughout
2022. The unavailable information could have a significant impact
on the company’s full year 2021 and full year 2022 reported
financial results.
Full Year 2021
The company expects to deliver organic revenue (non-GAAP) growth
of 13% to 14%. – Updated
For comparable net revenues (non-GAAP), the company expects a 1%
to 2% currency tailwind based on the current rates and including
the impact of hedged positions. – Unchanged
The company’s underlying effective tax rate (non-GAAP) is
estimated to be 18.6%. This does not include the impact of the
ongoing tax litigation with the U.S. Internal Revenue Service, if
the company were not to prevail. – Updated
Given the above considerations, the company expects to deliver
comparable EPS (non-GAAP) growth of 15% to 17% versus $1.95 in
2020. – Updated
Comparable EPS (non-GAAP) percentage growth includes a 2% to 3%
currency tailwind based on the current rates and including the
impact of hedged positions. – Unchanged
The company expects to generate free cash flow (non-GAAP) of
approximately $10.5 billion through cash flow from operations of
approximately $12.0 billion less capital expenditures of
approximately $1.5 billion. This does not include any potential
payments related to the ongoing tax litigation with the U.S.
Internal Revenue Service. – Updated
Fourth Quarter 2021
Considerations – New
Comparable net revenues (non-GAAP) are expected to include an
approximate even currency impact based on the current rates and
including the impact of hedged positions.
Comparable EPS (non-GAAP) is expected to include an approximate
2% currency tailwind based on the current rates and including the
impact of hedged positions.
The fourth quarter has six fewer days compared to fourth quarter
2020.
Full Year 2022 – New
The company is providing the following considerations for
2022:
- The company is confident in the underlying momentum in the
business, supported by our transformation work, innovation agenda,
and a more efficient and effective approach to marketing.
- The company expects elevated commodity inflation, and
comparable cost of goods sold (non-GAAP) is expected to include a
mid single-digit percentage commodity headwind based on the current
rates and including the impact of hedged positions.
- Additionally, the company will continue to invest in the
marketplace to support ongoing growth in organic revenues
(non-GAAP).
- The company is providing the initial currency outlook for full
year 2022 as follows:
- Comparable net revenues (non-GAAP) are expected to include an
approximate 2% to 3% currency headwind based on the current rates
and including the impact of hedged positions.
- Comparable EPS (non-GAAP) is expected to include an approximate
2% to 3% currency headwind based on the current rates and including
the impact of hedged positions.
The company will provide full year 2022 guidance when it reports
fourth quarter earnings.
Notes
- All references to growth rate percentages and share compare the
results of the period to those of the prior year comparable period,
unless otherwise noted.
- All references to volume and volume percentage changes indicate
unit case volume, unless otherwise noted. All volume percentage
changes are computed based on average daily sales, unless otherwise
noted. “Unit case” means a unit of measurement equal to 192 U.S.
fluid ounces of finished beverage (24 eight-ounce servings), with
the exception of unit case equivalents for Costa non-ready-to-drink
beverage products which are primarily measured in number of
transactions. “Unit case volume” means the number of unit cases (or
unit case equivalents) of company beverages directly or indirectly
sold by the company and its bottling partners to customers or
consumers.
- “Concentrate sales” represents the amount of concentrates,
syrups, beverage bases, source waters and powders/minerals (in all
instances expressed in equivalent unit cases) sold by, or used in
finished beverages sold by, the company to its bottling partners or
other customers. For Costa non-ready-to-drink beverage products,
“concentrate sales” represents the amount of coffee (in all
instances expressed in equivalent unit cases) sold by the company
to customers or consumers. In the reconciliation of reported net
revenues, “concentrate sales” represents the percent change in net
revenues attributable to the increase (decrease) in concentrate
sales volume for the geographic operating segments and the Global
Ventures operating segment after considering the impact of
structural changes, if any. For the Bottling Investments operating
segment, this represents the percent change in net revenues
attributable to the increase (decrease) in unit case volume
computed based on total sales (rather than average daily sales) in
each of the corresponding periods after considering the impact of
structural changes, if any. The Bottling Investments operating
segment reflects unit case volume growth for consolidated bottlers
only.
- “Price/mix” represents the change in net operating revenues
caused by factors such as price changes, the mix of products and
packages sold, and the mix of channels and geographic territories
where the sales occurred.
First quarter 2021 financial results were impacted by five
additional days as compared to first quarter 2020, and fourth
quarter 2021 financial results will be impacted by six fewer days
as compared to fourth quarter 2020. Unit case volume results for
the quarters are not impacted by the variances in days due to the
average daily sales computation referenced above.
Conference Call
The company is hosting a conference call with investors and
analysts to discuss third quarter 2021 operating results today,
Oct. 27, 2021, at 8:30 a.m. ET. The company invites participants to
listen to a live webcast of the conference call on the company’s
website, http://www.coca-colacompany.com, in the “Investors”
section. An audio replay in downloadable digital format and a
transcript of the call will be available on the website within 24
hours following the call. Further, the “Investors” section of the
website includes certain supplemental information and a
reconciliation of non-GAAP financial measures to the company’s
results as reported under GAAP, which may be used during the call
when discussing financial results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027005297/en/
Investors and Analysts: Tim
Leveridge, koinvestorrelations@coca-cola.com Media: Scott Leith, sleith@coca-cola.com
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