This summary is based on the first quarter fiscal 2008 earnings call conducted by The Coca-Cola Company (CO) on April 16, 2008.
Management:
President, Chief Operating Officer: Muhtar Kent
Chairman of the Board, Chief Executive Officer: Neville Isdell
Chief Financial Officer, Executive Vice President: Gary P. Fayard
Vice President and Director of Investor Relations: Ann Taylor
Key Investors Issues
- EPS were 64 cents per share compared to 54 cents per share last year.
- Net income was $1.50 billion compared to $1.26 billion a year ago.
- Net operating revenue rose to $7.38 billion from $6.10 billion a year ago.
First Quarter Highlights
Earnings per share were 64 cents, an increase of 19% versus the prior year on a reported basis, and 67 cents per share after considering items impacting comparability, an increase of 20%.
Earnings per share included a net charge of 3 cents per share primarily related to restructuring charges and asset write-downs. Earnings per share for the first quarter of 2007 were 54 cents, which included a net charge of 2 cents per share primarily related to an asset write-off in the Philippines bottler, partially offset by gains on the sales of the equity interest in a Brazilian bottler and real estate in Spain.
Net operating revenues increased 21%.
- Revenue growth reflected a 5% increase in concentrate sales, a 5% increase from structural changes primarily related to bottler acquisitions, a 9% currency benefit and a 2% favorable impact from pricing and mix.
- Operating income increased 15% on a reported basis and increased 19% after considering items impacting comparability.
- Items impacting comparability negatively affected operating income by $78 million in 2008 and by $10 million in 2007.
- Currency benefited ongoing operating income in the quarter by 11%.
- Cash from operations was $1.1 billion, an 18% increase versus the prior year.
- The company repurchased $309 million of its stock and expects to repurchase $1.5 to $2 billion of its stock for the full year.
- In February, the company approved its 46th consecutive annual dividend increase, raising the quarterly dividend 12% over 2007.
Unit case volume increased 6%, cycling 6% growth in the prior year quarter.
- Acquisitions contributed 2 points of unit case volume growth.
- International operations delivered 7% unit case volume growth, successfully cycling 9% growth in the prior year. Double-digit unit case volume growth in key emerging markets, including China, India, Brazil, Turkey, Russia, Eastern Europe and the Philippines continued to drive the results. Latin America continued to deliver strong unit case volume growth of 9%. European Union achieved unit case volume growth of 3%, successfully cycling double-digit growth in the prior year quarter. Japan continued to show signs of stabilization delivering its sixth consecutive quarter of growth. North America unit case volume was even reflecting the challenges in the U.S. economy.
- The company continued to deliver solid growth in sparkling beverages, which increased unit case volume 3%, led by 5% growth in International. Key brands drove the results with Trademark Coca-Cola growing unit case volume 2%. Trademarks Fanta and Sprite increased unit case volume by 2% and 6%, respectively.
- Still beverage unit case volume increased 17%, led by strong growth across the company’s still brand portfolio including juice and juice drink brands, tea brands and water brands.
The company gained global volume and value share in nonalcoholic ready-to-drink beverages, as well as in both sparkling and still categories.
The Africa Group's unit case volume decreased 1%, cycling 17% growth in the prior year quarter, reflecting volume declines in South Africa and Nigeria, offset by solid growth in East and Central Africa and North and West Africa. Net revenues increased 1%, reflecting a 3% increase in concentrate sales with positive pricing and a low single-digit currency benefit, partially offset by unfavorable country mix.
- Operating income growth of 13% reflected the increase in net revenues and favorable business mix while continuing to invest in key marketing initiatives.
- South Africa’s unit case volume declined 9%, cycling 29% growth in the prior year quarter, driven by supply chain issues resulting from carbon dioxide shortages in the current quarter and the cycling of strong growth in the prior year quarter, primarily related to the replenishment of trade inventory levels due to carbon dioxide shortages in late 2006. Nigeria’s unit case volume declined 1%, cycling 18% growth in the prior year quarter, with Trademark Coca-Cola up low single digits.
The Eurasia Group’s unit case volume increased 13% in the quarter, cycling 16% growth in the prior year quarter.
- Double-digit unit case volume growth in key markets including India, Turkey, Russia and Eastern Europe drove the strong performance.
- Net revenues increased 49%, reflecting a 14% increase in concentrate sales with positive pricing and mix, including growth in finished products businesses, and a mid teens currency benefit.
- Operating income increased 67% reflecting the net revenue increase while continuing to invest in key marketing initiatives.
- In India, unit case volume increased 13%. Double-digit unit case volume growth in Trademark Coca-Cola and still beverages led to continued share gains in both sparkling and still beverage categories.
Unit case volume in the European Union Group increased 3%, successfully cycling 11% growth in the prior year quarter.
- Net revenues increased 17%, reflecting a 2% increase in concentrate sales, positive pricing and mix and a low teens currency benefit.
- Operating income increased 14% primarily reflecting the higher net revenues while continuing to invest behind key marketing initiatives across the group.
- The results for the quarter reflected continued balanced growth across the portfolio, achieving 2% unit case volume growth in sparkling beverages and double-digit growth in still beverages. Unit case volume growth was also broad-based across the countries, with all key countries reflecting growth. Great Britain's unit case volume increased mid single digits, achieving its second consecutive quarter of growth. Germany's unit case volume increased 2%, successfully cycling 11% growth in the prior year quarter.
