Coca-Cola on Tuesday said that the closure of movie theaters, restaurants and stadiums from the coronavirus is continuing to hurt its business, with a material impact expected on its second-quarter results.
The beverage company’s global volumes have plunged 25% since the start of April.
“The ultimate impact on the second quarter and full year 2020 is unknown at this time, as it will depend heavily on the duration of social distancing and shelter-in-place mandates, as well as the substance and pace of macroeconomic recovery,” Coke said. “However, the impact to the second quarter will be material.”
Coke’s comments came as the company reported its first-quarter results, which received a short-term lift from consumers stocking up on beverages as they prepared for an extended stay at home.
Shares of the company rose 1.3% in premarket trading.
Here’s what the company reported:
- Earnings per share: 51 cents, adjusted
- Revenue: $8.60 billion
Coke reported fiscal first-quarter net income of $2.78 billion, or 64 cents per share, up from $1.68 billion, or 39 cents per share, a year earlier.
Excluding asset impairment charges and other items, Coke earned 51 cents per share.
Net sales dropped 1% to $8.60 billion. Organic revenue, which strips out the impact of foreign currency, acquisitions and divestitures, for the quarter was flat.
Wall Street anticipated earnings per share of 44 cents on revenue of $8.28 billion, based on a survey of analysts by Refinitiv. However, it’s difficult to compare reported earnings to analyst estimates for Coke’s quarter, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.
Coke said it started the year with “solid momentum,” after reporting strong results in 2019. Excluding China, the company’s unit case volume was growing by 3% through the end of February, before countries worldwide began enacting social-distancing measures and stay-at-home orders.
Coke saw heightened demand from grocery stores and e-commerce channels for its drinks in some markets in March due to stockpiling. About half of the company’s revenue typically comes from consumers drinking at home.
In Latin America and Europe, the Middle East and Africa, volumes were flat for the quarter as sales took a hit in March due to the virus. Asia Pacific, where the virus hit first, reported falling volumes of 7%. North America was the sole region to see growing volumes.
Unit case volume of water, enhanced water and sports drinks grew 2% in the quarter, but the segment was the only category to report volume growth as demand in Asia Pacific shrank.
Sparkling soft drinks’ volume dropped by 2%. Its juice, dairy and plant-based drinks segment and its tea and coffee business both saw volume declines of 6% during the quarter.
The company said that its full-year financial results cannot be estimated this time, citing the uncertainty around the coronavirus pandemic. The company withdrew its 2020 outlook in March. Coke previously forecast that 2020 organic revenue would grow by 5% and adjusted earnings per share would increase by 7% to $2.25.
Coke also said Tuesday that a stronger dollar will hurt its second-quarter revenue by 4% to 5%.
“We’ve been through challenging times before as a company, and we believe we’re well positioned to manage through and emerge stronger,” said James Quincey, its chairman and CEO, in the company’s press release.
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