Coca-cola revenue and sales bubble up
Coca-cola Co.’s sales beat expectations in the first quarter as the soda maker said it saw early — though uneven — signs of recovery in demand, particularly in areas with stronger rates of vaccination against COVID-19.
The company also said it plans to sell a portion of the Coca-cola Beverages Africa bottling business via an initial public offering.
Coke’s organic revenue, which excludes the impact of currency or acquisitions, climbed 6 per cent in the quarter ended April 2, according to a statement Monday. That topped the estimated 0.5 per cent growth analysts had been expecting, according to forecasts compiled by Bloomberg.
The results hint at a potential rebound as consumers worldwide emerge from more than a year of isolation, a process that is happening at different rates in different countries. The company is “encouraged by improvements in our business, especially in markets where vaccine availability is increasing and economies are opening up,” chief executive officer James Quincey said in the statement.
The soda business is unlikely to see full recovery
until people are back at restaurants and amusement parks worldwide, buying overpriced hot dogs and giant-sized soft drinks. The uneven reopening pace is showing up in the results: Recovery remains “asynchronous” around the world, the company said. Unit case volume was down 6 per cent in North America, but up 9 per cent in Asia Pacific. Globally, case unit volume was flat.
Coke shares rose 0.6 per cent to US$54 in Monday trading in New York. The stock declined 2.1 per cent this year through Friday.
The company also announced plans to list Cocacola Beverages Africa as a publicly traded company within the next 18 months. “A stand-alone listing for CCBA will enable the bottler to build on its growth trajectory and access capital independently to meet the investment needs of the business, which is great for stakeholders across Africa,” said Jacques Vermeulen, CEO of CCBA.
An IPO of Coke’s stake could value the African business at about US$6 billion, Bloomberg News reported last month.
The soft-drink giant, which owns 66.5 per cent of the bottling company, didn’t specify how much of its stake it intends to sell.
Coke is grappling with the commodity inflation pressures that are affecting other manufacturers, chief financial officer John Murphy said in an interview.
While consumer prices may start to rise this quarter, the company is “wellhedged” to withstand much of the cost pressure in the near term, he said. “We think it’s manageable this year; it’s really a 2022 challenge.”