Coca-Cola beat estimates for quarterly earnings and revenue Tuesday after consumers bought more of its water, sports drinks and its namesake Zero Sugar beverages.
Shares of the company jumped 3% in premarket trading.
“We’re encouraged by our first quarter results as our disciplined growth strategies continue to deliver strong underlying performance,” CEO James Quincey said in a statement.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 48 cents, adjusted, vs. 46 cents expected
- Revenue: $8.02 billion vs. $7.88 billion expected
The beverage giant reported fiscal first-quarter net income of $1.68 billion, or 39 cents per share, up from $1.33 billion, or 32 cents per share, a year earlier.
From continuing operations, the Atlanta-based company earned 48 cents per share, topping the 46 cents per share expected by analysts surveyed by Refinitiv.
Net sales rose 5% to $8.02 billion, beating expectations of $7.88 billion. The company attributed 2% of the sales growth to timing related to building up bottler inventory to hedge Brexit uncertainty.
Unit case volume — the number of unit cases of Coke beverages sold to customers, which helps measure growth without the impact of price and currency changes — grew 2%, helped by key markets in Asia and Europe. Asia returned to higher single-digit growth after a fourth quarter that saw unit case volume increase by only 2%.
“With the first quarter, the fourth quarter looks like more of a blip,” Quincey told analysts on the conference call, attributing the better numbers to a renewed appetite for its juices in India and its single-serve waters in China.
Argentina once again was a sore spot, with volume declining by double digits as the country’s recession continued into 2019. North American unit case volume declined by 1%, while net sales for the region rose by 1%. The company blamed the impact of price hikes and packaging initiatives, as well as the timing of Easter, which landed late this year.
Sparkling soft drinks unit case volume grew by 1%. The Coca-Cola brand continues to perform well globally, thanks to Coca-Cola Zero Sugar’s double-digit growth for its sixth consecutive quarter. In February, the brand launched its first new flavor in more than a decade: Orange Vanilla.
“Constant innovation is crucial for sustained growth,” Quincey said.
This year the company will introduce Coca-Cola Coffee to more than 25 markets around the world after successful tests in Asia. The drink will be pitched as a way to help consumers get through the “afternoon slump,” according to Quincey.
The company’s water, enhanced water and sports drink business saw unit case volume grow by 6%, driven by consumers’ eagerness for smaller, immediate consumption packages.
The company also completed its $5.1 billion acquisition of British coffee chain Costa during the three months ended March 29. Coca-Cola plans to introduce Costa ready-to-drink products in its second quarter. Quincey said that the launch will likely be concentrated in markets that are already familiar with the brand.
“We’re in early days of working out exactly how we’re going to bring to life the synergy plans for greater revenue growth and profit growth ,” Quincey said on CNBC’s “Squawk on the Street.”
After the company told investors last quarter that its 2019 earnings could decline by as much as 1%, its stock had its worst day in more than a decade. Quincey attributed the gloomy outlook to currency fluctuations, Fed rate hikes and changing tax rates. The company reiterated its full-year outlook, forecasting that earnings per share could fall or rise by 1% and organic revenue growth of 4%.
Following Coke’s annual meeting Wednesday, Quincey will become chairman of the company as long as he is reelected as a director. Quincey is taking over from Muhtar Kent, who served as CEO from 2008 until 2017.
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