Coca-Cola said in its second quarter earnings report published Wednesday that it gained non-alcoholic ready-to-drink (NARTD) beverage volume for the 21st consecutive quarter, driven by an increase in both the quantity and quality of marketing investments, and also its “continued rational approach to pricing and disciplined price/pack strategies”.
Net income was boosted by an accounting gain of $1.4 billion related to the purchase of a 16.7% stake in Monster Beverage and the transfer Coca-Cola’s energy drink business to Monster.
In the latest quarter, Coke said world-wide soda volumes grew 1 per cent, while non-carbonated beverage volumes grew 5 per cent.
Moving on to revenues, the industry giant is reported to have surpassed analysts’ expectations by a mammoth of $100 million, at least reflecting a YoY slide of 3%, which may have mixed effects on the stock price movement today, although, investors are advised to remain cautious, as the trading session begins.
Sandy Douglas, president of Coca-Cola North America, attributed the drink’s declining sales to the move away from diet and frozen products in recent years, with people reaching for options they consider to be fresh or natural. The company has been rated as hold from 4 Wall Street Analysts. The company has a market cap of $179.53 billion and a price-to-earnings ratio of 25.91. Prices there increased 4 percent in the quarter, while volume was up 2 percent.
To offset the slower growth and to improve financial performance, the company said it would cut its costs and pour part of that savings into more marketing. During the year ended December 31, 2011, it sold approximately 12 billion bottles and cans (or approximately 620 million physical cases) throughout its territories.
Cowen and Co analyst Vivien Azer said in a note that the tighter range seemed “consistent with the share repurchase revision that we saw last October, where the company narrowed their outlook for buybacks”. He noted health authorities have repeatedly found aspartame to be safe over decades.
Net income rose 19.6% to $3.11bn, or 71 cents per share, with underlying earnings slipped one cent to 63 cents per share on the same period past year.
Coca-Cola Femsa SAB de CV (Coca-Cola FEMSA) is a Mexico-based producer and distributer of beverages, bottled water, juices, teas, isotonics and beer.