Global Unit Case Volume Grew 8%
Net Revenues Grew 16%; Organic Revenues
(Non-GAAP) Grew 18%
Operating Income Grew 25%; Comparable Currency
Neutral Operating Income (Non-GAAP) Grew 24%
Operating Margin Was 32.5% Versus 30.2% in the
Prior Year; Comparable Operating Margin (Non-GAAP) Was 31.4% Versus
31.0% in the Prior Year
EPS Grew 23% to $0.64; Comparable EPS
(Non-GAAP) Grew 16% to $0.64
The Coca-Cola Company today reported first quarter 2022 results,
showing continued momentum in our marketplace performance. “We are
pleased with our first quarter results as our company continues to
execute effectively in a highly dynamic and uncertain operating
environment,” said James Quincey, Chairman and CEO of The Coca-Cola
Company. “We remain true to our purpose and are staying close to
consumers. We are confident in our full-year guidance, and we are
well-equipped to win in all types of environments as we fuel strong
topline momentum and create value for our stakeholders.”
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Highlights
Quarterly Performance
- Revenues: Net revenues grew 16% to $10.5 billion, and
organic revenues (non-GAAP) grew 18%. Revenue performance included
7% growth in price/mix and 11% growth in concentrate sales.
Concentrate sales were 3 points ahead of unit case volume, largely
due to the timing of concentrate shipments in the current quarter,
partially offset by the impact of one less day in the quarter.
- Margin: Operating margin, which included items impacting
comparability, was 32.5% versus 30.2% in the prior year, while
comparable operating margin (non-GAAP) was 31.4% versus 31.0% in
the prior year. Operating margin expansion was primarily driven by
strong topline growth, partially offset by an increase in marketing
investments versus the prior year, the impact of the BODYARMOR
acquisition and currency headwinds.
- Earnings per share: EPS grew 23% to $0.64, and
comparable EPS (non-GAAP) grew 16% to $0.64. Comparable EPS
(non-GAAP) performance included the impact of an 8-point currency
headwind.
- 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.
- Cash flow: Cash flow from operations was approximately
$620 million, a decline of $1.0 billion versus the prior year, as
strong business performance was more than offset by the impact of
cycling the timing of working capital benefits in the prior year
and higher 2021 annual incentives in the current year. Free cash
flow (non-GAAP) was approximately $400 million, a decline of $1.0
billion versus the prior year.
Company Updates
- Support for employees and people in Ukraine: The company
and its bottling partners continue to prioritize the safety of
associates and their families in Ukraine. The company has activated
relief funds to provide urgent financial assistance to all
Ukraine-based system employees. To support humanitarian relief
efforts in the region, the company, its global bottling partners
and The Coca-Cola Foundation have committed to contributions and
product donations totaling nearly $15 million. This funding will
support further relief efforts by the Red Cross and other
organizations operating in Ukraine and neighboring countries,
helping millions of displaced people.
- Driving beverage incidence through end-to-end consumer
engagement: The company is continuing to leverage insights and
passion points to improve its connection with existing and
potential consumers. The company launched the “Magic Weekends”
campaign for Trademark Coca-Cola, which is the next chapter of the
“Real Magic” platform. The company is partnering with food service
aggregators across all nine of its operating units for this
campaign, with a strong focus on Coca-Cola Zero Sugar. The
campaign, which is the largest “Coke and Meals” activation by the
company planned for 2022, launched in the North America market with
DoorDash as a delivery partner. Through this campaign, the company
will optimize consumers’ digital purchasing experience by engaging
with consumers at the point-of-sale, driving beverage incidence
intended to create value for all stakeholders.
- Building a competitive edge through excellence in revenue
growth management (RGM): The company, in close alignment with
its bottling partners, continues to raise the bar in integrated
execution to deliver value to its customers and consumers in an
inflationary environment. Accelerated cost pressures and ongoing
supply challenges continue across markets, and the company is
leveraging RGM to provide compelling customer and consumer
solutions by segmenting markets based on occasion, brand, price,
package and channel. For example, in India, the company is
increasing its consumer base by expanding affordable offerings at
key transaction-driving price points through the use of
single-serve packages. In the first quarter, this strategy yielded
strong results with more than 500 million incremental transactions
added in India, up nearly 20% versus the prior year. Approximately
70% of these incremental transactions were driven by small packages
such as returnable glass bottles and affordable, single-serve PET
packages.
- Partnering to make a difference and create shared value:
The company continues to focus on issues that have a measurable,
positive impact on communities as well as create opportunities for
business growth. The company and its bottling partners are
investing in various partnerships in order to expand the collection
infrastructure and increase recycling in many markets, including
Australia, Brazil, Japan and Mexico, while also expanding our
reusable packaging portfolio. As part of a global partnership with
the company, The Ocean Cleanup launched its trash collection system
for testing in Vietnam. The system will intercept plastic debris in
primary waterways before it can reach the ocean. Actions such as
these help drive packaging circularity and support the company’s
World Without Waste initiatives, including recyclability, virgin
plastic reduction, reusable packaging and the company’s goal to
collect and recycle a bottle or can for every one it sells by
2030.
Operating Review – Three
Months Ended April 1, 2022
Revenues
and Volume
Percent Change
Concentrate Sales1
Price/Mix
Currency Impact
Acquisitions, Divestitures and
Structural Changes, Net
Reported Net Revenues
Organic Revenues2
Unit Case Volume3
Consolidated
11
7
(4)
3
16
18
8
Europe, Middle East & Africa
15
6
(9)
0
13
22
11
Latin America
20
19
(6)
0
34
39
9
North America
3
11
0
8
22
14
5
Asia Pacific
0
6
(5)
0
1
5
4
Global Ventures4
22
12
(6)
0
28
34
23
Bottling Investments
7
5
(5)
0
8
12
8
Operating Income and EPS
Percent Change
Reported Operating Income
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated
25
7
(6)
24
Europe, Middle East & Africa
23
7
(10)
26
Latin America
38
0
(5)
42
North America
33
14
0
19
Asia Pacific
(3)
2
(5)
0
Global Ventures
94
19
(5)
79
Bottling Investments
37
(5)
(8)
50
Percent Change
Reported EPS
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral2
Consolidated EPS
23
7
(8)
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 Unit case volume is computed based on
average daily sales.
4 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.
In addition to the data in the preceding tables, operating
results included the following:
Consolidated
- Unit case volume grew 8%, with broad-based growth across all
operating segments. Volume performance was driven by continued
investments in the marketplace and a benefit from cycling the
impact of the pandemic in the prior year. Developed markets as well
as developing and emerging markets grew high single digits. Growth
in developed markets was led by the United States, the United
Kingdom and Mexico, while growth in developing and emerging markets
was led by Brazil and India.
Category performance was as follows:
- Sparkling soft drinks grew 7%, driven by growth across all
geographic operating segments, primarily Europe, Middle East &
Africa and Latin America. Trademark Coca-Cola grew 6%, driven by
growth across all geographic operating segments. Coca-Cola® Zero
Sugar grew 14%, driven by double-digit growth across all geographic
operating segments. Sparkling flavors grew 7%, led by Europe,
Middle East & Africa and Latin America.
- Nutrition, juice, dairy and plant-based beverages grew 12%, led
by fairlife® in the United States, Minute Maid® Pulpy in China and
Maaza® in India.
- Hydration, sports, coffee and tea grew 10%. Hydration grew 8%,
led by strong growth in Latin America and Europe, Middle East &
Africa. Sports drinks grew 22%, primarily driven by strong growth
of BODYARMOR and Powerade®. Tea grew 8%, led by growth in Brazil,
Japan and Mexico. Coffee grew 27%, primarily driven by cycling the
impact of Costa retail store closures in the United Kingdom in the
prior year and continued expansion of Costa coffee across
markets.
- Price/mix grew 7%, driven by pricing actions in the marketplace
along with favorable channel and package mix due to cycling the
impact of the pandemic in the prior year. Price/mix further
benefited by positive segment mix. Concentrate sales were 3 points
ahead of unit case volume, largely due to the timing of concentrate
shipments in the current quarter, partially offset by the impact of
one less day in the quarter.
- Operating income grew 25%, which included items impacting
comparability and a 6-point currency headwind. Comparable currency
neutral operating income (non-GAAP) grew 24%, driven by strong
organic revenue (non-GAAP) growth across all operating segments,
including a benefit from the timing of concentrate shipments in
certain operating segments. This was partially offset by an
increase in marketing investments versus the prior year.
Europe, Middle East &
Africa
- Unit case volume grew 11%, driven by investments in the
marketplace and a benefit from cycling the impact of the pandemic
in the prior year. Volume performance included strong growth in
Western Europe, Egypt and Pakistan.
- Price/mix grew 6%, driven by pricing actions along with
favorable channel and package mix due to cycling the impact of the
pandemic in the prior year, in addition to inflationary pricing in
Turkey. Concentrate sales were 4 points ahead of unit case volume,
largely due to the timing of concentrate shipments in the current
quarter, partially offset by the impact of one less day in the
quarter.
- Operating income grew 23%, which included items impacting
comparability and an 11-point currency headwind. Comparable
currency neutral operating income (non-GAAP) grew 26%, primarily
driven by strong organic revenue (non-GAAP) growth across all
operating units, including a benefit from the timing of concentrate
shipments in certain operating units. This was partially offset by
an increase in marketing investments versus the prior year.
- The company gained value share in total NARTD beverages with
share gains across most categories.
Latin America
- Unit case volume grew 9%, with strong growth across most
categories. Growth was led by Mexico, Brazil, Argentina and
Colombia.
- Price/mix grew 19%, driven by pricing actions in the
marketplace and favorable channel and package mix, in addition to
inflationary pricing in Argentina. Concentrate sales were 11 points
ahead of unit case volume, largely due to the timing of concentrate
shipments in the current quarter, partially offset by the impact of
one less day in the quarter.
- Operating income grew 38%, which included a 7-point currency
headwind. Comparable currency neutral operating income (non-GAAP)
grew 42%, primarily driven by strong organic revenue (non-GAAP)
growth, which included a benefit from the timing of concentrate
shipments, partially offset by an increase in marketing investments
versus the prior year.
- The company lost value share in total NARTD beverages as share
gains in sparkling flavors, tea and coffee were more than offset by
pressure in other categories.
North America
- Unit case volume grew 5%. Growth was driven by further recovery
in the fountain business as coronavirus related uncertainty
continued to abate. Sparkling soft drinks and sports drinks led
growth during the quarter.
- Price/mix grew 11%, primarily driven by pricing actions in the
marketplace, continued recovery in the fountain business and
away-from-home channels, and strong growth in premium offerings.
Price/mix growth included a benefit resulting from the timing of
price increases in the prior year. Concentrate sales were 2 points
behind unit case volume, primarily due to the impact of one less
day in the quarter.
- Operating income grew 33%, which included items impacting
comparability. Comparable currency neutral operating income
(non-GAAP) grew 19%, driven by strong organic revenue (non-GAAP)
growth, partially offset by an increase in marketing investments
versus the prior year.
- The company gained value share in total NARTD beverages, driven
by continued recovery in away-from-home channels along with strong
performance in at-home channels across most categories.
Asia Pacific
- Unit case volume grew 4%, driven by India and the Philippines,
partially offset by pressure in China due to reduced consumer
mobility resulting from a resurgence in COVID-19 cases. Growth was
led by Trademark Coca-Cola and sparkling flavors.
- Price/mix grew 6%, driven by pricing actions in the
marketplace, favorable channel and package mix, and positive
geographic mix. Concentrate sales were 4 points behind unit case
volume due to the timing of shipments in the current quarter along
with the impact of one less day in the quarter.
- Operating income declined 3%, which included items impacting
comparability and a 5-point currency headwind. Comparable currency
neutral operating income (non-GAAP) was even, primarily driven by
solid organic revenue (non-GAAP) growth, partially offset by an
increase in marketing investments versus the prior year.
- The company gained value share in total NARTD beverages led by
share gains in Japan, Australia and the Philippines.
Global Ventures
- Net revenues grew 28% and organic revenues (non-GAAP) grew 34%.
Net revenues included a 6-point currency headwind. Revenue growth
benefited from cycling the impact of Costa retail store closures in
the United Kingdom in the prior year.
- 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 8%, driven by strong growth in the key
markets of India and the Philippines.
- Price/mix grew 5%, driven by pricing actions across key
markets.
- Operating income grew 37%, which included items impacting
comparability and a 7-point headwind from currency. Comparable
currency neutral operating income (non-GAAP) grew 50%, driven by
strong organic revenue (non-GAAP) growth.
Outlook
The 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 2022 projected organic revenues (non-GAAP) to full-year
2022 projected reported net revenues, 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, full-year 2022 projected underlying effective tax rate
(non-GAAP) to full-year 2022 projected reported effective tax rate,
full-year 2022 projected comparable currency neutral EPS (non-GAAP)
to full-year 2022 projected reported EPS 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 2022; the exact timing and amount of acquisitions,
divestitures and/or structural changes throughout 2022; the exact
timing and amount of items impacting comparability throughout 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 2022 reported financial results.
Full Year 2022
On March 8, 2022, the company announced the suspension of its
business in Russia as a result of the conflict in Ukraine. The
approximate direct impacts of this are estimated to be as
follows:
- 1% impact to unit case volume
- 1% to 2% impact to net revenues and operating income
- $0.04 impact to comparable EPS (non-GAAP)
These estimated impacts are reflected in the outlook commentary
below.
The company expects to deliver organic revenue (non-GAAP) growth
of 7% to 8%. – No Change
For comparable net revenues (non-GAAP), the company expects a 2%
to 3% currency headwind based on the current rates and including
the impact of hedged positions, in addition to a 3% tailwind from
acquisitions. – No Change
The company expects commodity price inflation to be a mid
single-digit percentage headwind on comparable cost of goods sold
(non-GAAP), based on the current rates and including the impact of
hedged positions. – No Change
The company’s underlying effective tax rate (non-GAAP) is
estimated to be 19.5%. This does not include the impact of 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 currency neutral EPS (non-GAAP) growth of 8% to 10% and
comparable EPS (non-GAAP) growth of 5% to 6%, versus $2.32 in 2021.
– No Change
Comparable EPS (non-GAAP) percentage growth is expected to
include a 3% to 4% currency headwind based on the current rates and
including the impact of hedged positions, in addition to a minimal
tailwind from acquisitions. – No Change
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 ongoing tax litigation with the U.S. Internal
Revenue Service. – No Change
Second Quarter 2022
Considerations – New
Comparable net revenues (non-GAAP) are expected to include an
approximate 4% currency headwind based on the current rates and
including the impact of hedged positions, in addition to a 3%
tailwind from acquisitions.
Comparable EPS (non-GAAP) percentage growth is expected to
include an approximate 4% currency headwind based on the current
rates and including the impact of hedged positions.
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 unit case equivalents) 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 beverages, primarily
measured in number of transactions (in all instances expressed in
unit case equivalents) 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 2022 financial results were impacted by one less
day as compared to first quarter 2021, and fourth quarter 2022
financial results will be impacted by one additional day as
compared to fourth quarter 2021. 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 first quarter 2022 operating results today,
April 25, 2022, 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/20220425005297/en/
Investors and Analysts: Tim
Leveridge, koinvestorrelations@coca-cola.com Media: Scott Leith, sleith@coca-cola.com
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