Coca-Cola Falls Flat; Look for Inorganic Growth in 2014
Coca-Cola Co. (NYSE:KO) may have a growth problem. Shares of the soft drink maker fell flat on Tuesday morning after the company reported fourth-quarter and full-year results that were marked by contracting revenues and declining operating income. Global volume grew 2 percent for the year and 1 percent in the fourth quarter, with structural changes and currency headwinds weighing on financial results.
“2013 was marked by ongoing global macroeconomic challenges in many markets around the world,” said Chairman and CEO Muhtar Kent in the earnings release. “And while our business was not immune to these pressures leading to moderated global volume growth, we delivered sound financial results in line with our long-term profit targets and gained global value share in total nonalcoholic ready-to-drink beverages as well as global volume and value share in core sparkling and still beverages for the year.”
Reported net revenues declined 4 percent in the fourth quarter to $11 billion, below the mean analyst estimate of $11.31 billion. This contraction primarily reflects the adverse macroeconomic conditions that Kent referred to. Excluding the impact of structural changes — mostly tied up with the de-consolidation of bottling operations in the Philippines and Brazil — and on a currency neutral basis, net revenues were up 3 percent. For the year, reported net revenues declined 2 percent to $46.86 billion.
Currency created a 6 percent headwind for reported operating income in the fourth quarter as well, and structural changes shaved off another 4 percent. Reported operating income decreased 4 percent for the quarter. Excluding currency and structural changes, operating income increased 6 percent. Adjusted earnings per share of 46 percents was in line with analyst estimates.