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Coca-Cola 4Q18 results meet expectations, 1Q19 forecast disappoints

The Coca-Cola Co. reported 4Q18 results on Thursday (14 February), which revealed that revenue stood at $7.1bn (-6% YoY), slightly above expectations and compared with $7.5bn posted in 4Q17, negatively impacted by the refranchising of its low-margin bottling operations. Meanwhile, diluted EPS came out in-line with expectations at $0.43 and vs $0.39 recorded in the corresponding period of 2017. Refinitiv consensus analyst forecasts had expected revenue of $7.03bn and earnings of $0.43/ share.

Net sales were $7.06bn, more than the projected $7.04bn, however it was still down 6% YoY because of currency volatility and increasing transportation and import costs. International markets account for c. two-thirds of Coca-Cola’s revenue and the firm said that the Middle East, Argentina and Turkey were particularly weak, weighing on sales. It did note though that sales jumped in India and Eastern Europe with purchases of its popular Coca-Cola Zero Sugar drinks. To counter rising costs, Coca-Cola has raised prices of its beverages which it said resulted in more muted demand – volumes fell 1% YoY in North America, while volumes in Latin America were down 2% YoY.

CEO, James Quincey, noted that the results demonstrate “progress in our transformation as a consumer-centric, total beverage company and the power of a more strategically aligned system.” He added that Coca-Cola “ … has established a strong foundation to capitalise on long-term growth opportunities and drive sustained shareowner value,.”

Looking ahead, the company forecast adjusted 1Q19 EPS of $2.08 – below the expected $2.23/share, while it predicted core 2019 revenue growth of c. 4% YoY – down from 5% YoY in 2018.

Coca-Cola shares recorded one of their worst days in more than a decade after the company forecast slowing 2019 sales on the back of a stronger dollar and in the face of lower demand for its fizzy sodas in some markets.

Since Wednesday’s (13 February’s) close the share price is down 10%.



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