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Sales and Profits Fall at The Coca-Cola Company

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Sales and Profits Fall at The Coca-Cola Company

Sales and Profits Fall at The Coca-Cola Company
February 10
14:18 2017

The Coca-Cola Company has reported a 5% fall in net revenue to $41.86 billion for 2016 with net income declining by 11% to $6.5 billion. Total unit case volume grew 1% for the full year as the soft drinks giant’s developed markets grew by low single digits while its emerging and developing markets were even. Operating margin for 2016 expanded more than 90 basis points.

During the year, The Coca-Cola Company advanced its strategy to grow revenues and profits from its sparkling beverage portfolio while at the same time helping consumers reduce consumption of added sugars. In Western Europe, Coca-Cola Zero Sugar once again grew unit case volume double digits in the fourth quarter, boosted by expansion into France, Belgium, Netherlands, and Ireland. These recent moves extend the product beyond its initial launch market of Great Britain. Further expansion is planned in early 2017 for other European markets, Australia, and South Africa, among others.

In addition to these moves in its sparkling portfolio, The Coca-Cola Company continued the global expansion of smartwater, one of its premium water brands. While smartwater achieved double-digit unit case volume growth during the year in its home market of North America, it also helped drive full year high single-digit unit case volume growth in the still water category for its Western Europe business unit.

Muhtar Kent, chairman and chief executive of The Coca-Cola Company, comments: “We are pleased to report that we ended 2016 with fourth quarter top- and bottom-line growth within our expectations. Strong price/mix stemming from our continued focus on driving revenue and solid performance in our developed markets helped offset persistent macroeconomic pressures in our emerging and developing markets. Our flagship market of North America grew net revenues 8% for the quarter and 4% for the year, outperforming total retail value growth for both the North America non-alcoholic ready-to-drink beverage industry and US consumer packaged goods companies.”

James Quincey and Muhtar Kent.

He elaborates: “In addition to delivering our profit target for the full year, I am encouraged by the strategic actions taken during 2016 to strengthen our global bottling system. In the fourth quarter, we reached a definitive agreement to refranchise all company-owned bottling operations in China, and we took important steps to further the evolution of Coca-Cola Beverages Africa. During the year, we successfully completed the creation of Coca-Cola European Partners, and we supported the ongoing transformation of the franchise bottling system in Japan. And last, we remain on track to complete the refranchising of company-owned bottling operations in the United States by the end of 2017. In total, half of our global system revenue has been in motion through our recent actions to strengthen the system. The progress demonstrated by these actions is foundational in positioning our system for prosperity long into the future.”

The Coca-Cola Company is changing its leadership with James Quincey, currently chief operating officer, due to take over as chief executive on May 1. “Looking forward to 2017, we expect another year of volatility around the world. I don’t need to tell you about the rapid change that’s taking place on the geopolitical level,” says James Quincey. “Net-net we see the overall environment to be similar to what it did in 2016.”

The Coca-Cola Company is projecting 3% growth in currency-neutral revenue for 2017 with a 1% to 4% decline in full year earnings per share compared to the $1.91 per share achieved in 2016.

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