5% global volume growth with growth across every geographic operating group, and 4% global brand
Volume and value share gains across every nonalcoholic ready-to-drink beverage category in which The
First Quarter 2012 Highlights
- Strong global volume growth of 5% in the quarter, with growth across every geographic operating group. North America volume grew 2% and international volume grew 6% in the quarter.
- First quarter reported net revenues grew 6% and comparable currency neutral net revenues grew 7%, driven by solid price/mix of 3%.
- First quarter reported operating income grew 10%. Comparable currency neutral operating income grew 5% in the quarter. After adjusting for the 3% impact due to cycling lower commodity costs in the prior year period, our comparable currency neutral operating income grew 8% in the first quarter.
- First quarter reported and comparable EPS of $0.89.
- First quarter cash from operations up 8%. Excluding incremental pension contributions, cash from operations increased 13%.
- Productivity and reinvestment program with incremental annualized savings of $550 to $650 million by the end of 2015 is on track.
ATLANTA, April 17, 2012 - The
Company reported solid first quarter 2012 results, with strong volume and revenue growth, and volume and value share gains across every nonalcoholic ready-to-drink (NARTD) beverage category in which it competes. All geographic operating groups delivered volume growth in the quarter. Four out of five geographic operating groups also delivered comparable currency neutral net revenue growth, while Europe's comparable currency neutral net revenue growth rounded to even despite a continued volatile macroeconomic environment. This quarter's performance demonstrates that the Company continues to refresh a thirsty world while remaining focused on delivering its 2020 Vision.
Muhtar Kent, Chairman and Chief Executive Officer of The
Company said, "Our first quarter results underscore The
Company's resilience and a long-term focus on quality growth in every region of the world. Despite a continued mixed global environment, our hardworking teams achieved broad-based volume and value share gains in nonalcoholic ready-to-drink beverages globally, with volume growth across every geographic operating group and revenue growth ahead of our long-term growth target.
"As we enter the third year and complete the ninth quarter of our 2020 Vision, we continue to see vast opportunities for the
system across the more than 200 countries we serve. We are highly focused on creating value for our consumers, customers, communities and investors through our clear roadmap for growth, investments in our world-class brands, a productivity and reinvestment program that is driving efficiencies, and a global bottling system that is well-aligned for execution. It is these advantages that give us the confidence in our ability to achieve our long-term growth targets and deliver sustainable growth for the future.
Company reported worldwide volume growth of 5% for the first quarter. Volume growth in the quarter was well-balanced around the world, with solid growth in key developed markets, including North America (+2%), Japan (+3%) and Germany (+3%) as well as strong growth in key emerging markets such as India (+20%), China (+9%) and Brazil (+4%). In addition, high single-digit volume growth continued in countries with per capita consumption of Company brands less than 150 eight-ounce servings per year. Brand health remains strong, with continued improvements in favorite brand scores and growth among consumers who enjoy our brands more than once per week. In the first quarter, we grew global volume and value share in total NARTD beverages, with volume and value share gains across every beverage category in which we compete. Further, our immediate consumption beverage volume grew a healthy 6% globally in the quarter, driven by focused in-store activation efforts and the ongoing expansion of cold drink equipment placements.
We continued to see growth in sparkling beverages, with global volume up 4% in the quarter, sparkling beverage volume growth across every geographic operating group and gains in global volume and value share. This growth was driven by ongoing investments in our brands and innovation with globally scaled marketing campaigns, starting with brand
volume grew 4% in the quarter, with quality growth in many developed markets around the world, including Germany (+4%), the United States (+1%), Italy (+5%) and Spain (+3%) as well as in many emerging markets, including Brazil (+1%), Russia (+20%), India (+27%) and China (+5%). In addition, global Fanta and Sprite volume each grew 4% in the quarter, reflecting a balanced portfolio approach to growth in the important sparkling beverage category.
Worldwide still beverage volume grew 9% in the quarter, with growth across most beverage categories, including packaged water, ready-to-drink tea and coffee, energy drinks and sports drinks. We grew global volume and value share in total still beverages as well as across all still beverage categories in which we compete. Packaged water volume grew 15% in the quarter, with strong growth across all geographic operating groups as we continue to focus on innovative and sustainable packaging and immediate consumption occasions. Ready-to-drink tea volume grew 10%, with continued strong performance of key brands such as Gold Peak and Honest Tea in North America, Ayataka green tea in Japan and Nestea in Europe. Energy drinks volume grew 25% in the quarter driven by growth across our global portfolio of energy brands.
- All references to growth rate percentages, share and cycling of growth rates compare the results of the period to those of the prior year comparable period.
- "Concentrate sales" represents the amount of concentrates, syrups, beverage bases and powders sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.
- "Sparkling beverages" means NARTD beverages with carbonation, including energy drinks and carbonated waters and flavored waters.
- "Still beverages" means nonalcoholic beverages without carbonation, including noncarbonated waters, flavored waters and enhanced waters, juices and juice drinks, teas, coffees, sports drinks and noncarbonated energy drinks.
- All references to volume and volume percentage changes indicate unit case volume, except for the reference to "as reported" volume in North America and Bottling Investments Group. All volume percentage changes, unless otherwise noted, are computed based on average daily sales. "Unit case" means a unit of measurement equal to 24 eight-ounce servings of finished beverage. "Unit case volume" means the number of unit cases (or unit case equivalents) of Company beverages directly or indirectly sold by the Company and its bottling partners to customers.
- For both North America and Bottling Investments Group, net revenue growth attributable to volume reflects the increase in "as reported" volume, which is based on as reported sales rather than average daily sales. North America's "as reported" volume represents
Refreshments' as reported unit case sales (which are equivalent to concentrate sales) plus non-Company-owned bottling operations' concentrate sales.
- First quarter 2012 financial results were impacted by one less selling day, and fourth quarter 2012 financial results will be impacted by two additional selling days. Unit case volume results are not impacted by the variance in selling days due to the average daily sales computation referenced above.
- Due to the refocusing in 2012 of the Beverage Partners Worldwide (BPW) ready-to-drink tea joint venture with Nestlé S.A. (Nestlé ), we have eliminated the BPW joint venture volume from our reported results for both 2011 and 2012 in those countries in which the joint venture is being phased out during 2012. In addition, we eliminated the Nestea licensed volume in the U.S. due to our current U.S. license agreement with Nestlé terminating at the end of 2012. These changes did not impact the Company ' s reported volume results for first quarter 2012 on a consolidated basis or for any individual operating group. However, these changes increased the Company's reported first quarter 2012 volume growth for ready-to-drink tea by 2%.
- The Company reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, management believes that certain non-GAAP financial measures provide users with additional meaningful financial information that should be considered when assessing our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting.
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