This summary is based on the second quarter fiscal 2007 earnings call conducted by The Coca-Cola Company (KO) on July 17, 2007.
Key Investors Issues
- Net revenue grew 19% to $7.73 billion on worldwide unit case volume growth of 6%.
- Net income increased 1% to $1.85 billion, from $1.84 billion in June 2006.
- EPS increased 3% to 80 cents and 15% to 85 cents, after considering items impacting comparability.
- International unit case volume rose 9%, led by 6% growth in Trademark Coca-Cola.
- Coke''s bottling investment group reported a 14% operating income decline.
Half Year 2007 highlights
- Net revenue increased 18% to $13.8 billion against $11.7 billion in the previous year.
- Operating income increased by 13% to $3.9 billion.
- Net income increased 6% to $3.1 billion from $2.9 billion in June 2006.
- EPS increased to $1.34 from $1.25 in the previous year.
Second Quarter 2007 Highlights
Revenues increased 19% to $7.73 billion reflecting a 7% increase in concentrate sales, a 7 % increase from structural changes resulting from acquisitions of certain bottlers, a 2% benefit from pricing and mix and a 3% positive currency impact.
Net income increased to $2.41 billion from $2.39 billion.
- Earnings per share rose 3% to 80 cents vs. 70 cents for the second quarter of 2006.
- Operating income grew by 11% to $2.23 billion on a reported basis and 12% after considering items impacting comparability in both the current and prior year periods.
- The company repurchased shares of its stock worth $1 billion in the quarter and intends to repurchase a total of $1.75 to $2 billion of its stock for the full year.
- Cash from operations rose 19% to $3.3 billion vs. $2.8 billion in the prior-year period.
The company’s focus on productivity resulted in margin improvements in its core business.
Total Company Financial Highlights:
- Unit case volume increased 6% from a year ago;
- International operations delivered 9% unit case volume growth reflecting broad based growth across all key geographies;
- Sparkling beverages increased unit case volume 4% led by key brands Trademarks Coca-Cola, Fanta and Sprite;
- Still beverage unit case volume increased 12% from a year ago;
- The company gained value share globally in key beverage categories.
Sparkling Beverages volume increased 4% from a year ago, led by 3% growth in trademark Coca-Cola.
- Coca-Cola Zero, continues to grow the category and gain share by sourcing approximately 50% to 85% of its volume from our competition.
- Still beverages enjoyed strong performance from water portfolio, Powerade and Minute Maid which led to a 12% increase.
Africa: The performance was led by 12% growth in South Africa.
- Unit case volume increased 8% reflecting continued balanced growth.
- Net revenues increased 20 % to $300 million, reflecting a 15% increase in concentrate sales, positive pricing and mix.
- Operating income decreased 9% due to the increase in net revenues, offset by continued investment in key marketing initiatives.
Eurasia:
- Unit case volume increased 15 %;
- Net revenues for the quarter increased from $301 million to $352 million, benefiting from an 11% increase in concentrate sales, positive pricing, mix and currency impacts.
- Operating income grew 29% to $162 million, reflective of the benefit of the net revenue increase and the continued investment in key business initiatives.
- In India, unit case volume increased 12% on continued investment in building organizational capabilities and focus on improved execution pays dividends.
European Union:
- Unit case volume increased 5% driven by strong results in France, Germany and Central and Southern Europe.
Acquisitions of the Apollinaris and Fonti Del Vulture brands, in Germany and Italy respectively in 2006, contributed 3% of unit case volume growth.
- Net revenues increased $188 million to $1.25 billion;
- Operating income increased 21% to $829 million, reflecting continued investment in key marketing initiatives.
Latin America:
- Unit case volume increased 9% from a year ago;
- Net revenues increased 25%, reflecting a 9% increase in concentrate sales, positive pricing and mix benefits, and a mid-single digit currency benefit;
- Operating income increased 19%, reflecting the launch of Coca-Cola Zero in the new on-the-go ‘Contour Grip’ bottle;
- In Brazil, unit case volume growth was 22% from a year ago.
- The acquisition of Matte Leao contributed to unit case volume growth.
North America:
- Unit case volume declined 2% from a year ago;
- Net revenues increased 9% to $2.1 billion from $1.91 billion in June 2006;
- Retail unit case volume decreased 3% reflecting the difficult sparkling beverage industry and the 33% decline in warehouse-delivered water.
- The company now focuses on the more profitable Dasani business.
Sparkling beverage unit case volume declined 3% reflecting the increased retail pricing.
