Coca‑Cola Reports Continued Strong Results in Third Quarter; Updates Full Year Guidance


- Net Revenues Grew 8%; Organic Revenues (Non-GAAP) Grew 5%

- Operating Income Declined 4%; Comparable Currency Neutral Operating Income (Non-GAAP) Grew 5%

- Operating Margin Was 26.3%; Comparable Operating Margin (Non-GAAP) Was 28.1%; Margins Were Negatively Impacted by Currency Headwinds and Acquisitions

- EPS Grew 37% to $0.60; Comparable EPS (Non-GAAP) Declined 2% to $0.56, Impacted by a 6% Currency Headwind

ATLANTA, Oct. 18, 2019
– The Coca‑Cola Company continued to execute on its key strategies in the third quarter, with strong revenue growth and value share gains globally. Reported net revenues grew 8% and organic revenues (non-GAAP) grew 5%, driven by innovation, revenue growth management and improving execution. The company’s performance year-to-date has led to an update in full year guidance.

"Our performance gives us confidence that our strategies are taking hold with our consumers, customers and system," said James Quincey, chairman and CEO of The Coca‑Cola Company. "We are positioning the company to create a better shared future for all of our stakeholders by delivering on our vision and growing sustainably."

Quarterly Performance

- Revenues: Net revenues grew 8% to $9.5 billion. Organic revenues (non-GAAP) grew 5%. Revenue growth was driven by price/mix growth of 6%, partially offset by a 2% decline in concentrate sales.

- Margin: Operating margin, which included items impacting comparability, was 26.3% versus 29.8% in the prior year. Comparable operating margin (non-GAAP) was 28.1% versus 30.7% in the prior year. Margins were unfavorably impacted by a 260 basis point headwind from currency and net acquisitions.

- Earnings per share: EPS grew 37% to $0.60. Comparable EPS (non-GAAP) declined 2% to $0.56. Comparable EPS performance included the impact from a 6-point currency headwind.

- Market share: The company continued to gain value share in total nonalcoholic ready-to-drink (NARTD) beverages.

- Cash flow: Year-to-date cash from operations was $7.8 billion, up 37% largely due to strong underlying growth, working capital initiatives and the timing of tax payments. Year-to-date free cash flow (non-GAAP) was $6.6 billion, up 41%.

Company Updates

- Executing the revenue growth algorithm: The company continues to capitalize on opportunities for growth through expanded revenue growth management capabilities and improved execution. Key initiatives include increasing availability and distribution of priority SKUs. In Brazil, for example, expansion of priority package offerings at key price points, along with placing more than 100,000 incremental coolers in the marketplace, has led to double-digit transaction growth of immediate consumption priority packages year-to-date. Globally, growth in immediate consumption packages outpaced future consumption by 6 points during the quarter.

- Expanding headroom for growth in sparkling beverages: Globally, trademark Coca‑Cola has grown retail value 6% year-to-date through an accelerated pace of innovation and optimizing price/pack architecture in the marketplace. The largest contributor to retail value growth was the flagship U.S. market, driven by continued double-digit volume growth in Coca‑Cola Zero Sugar, in addition to strong growth in smaller packages, led by double-digit growth in 7.5-oz. mini cans. Internationally, a scaled launch of Coca‑Cola Plus Coffee in more than 20 markets with a diligent consumer focus, consistent messaging and an integrated execution plan has driven strong performance year-to-date. Accelerated revenue growth for core sparkling soft drink brands continues to fuel and enable new innovations and investments across the expanding total beverage portfolio.

- Disciplined portfolio growth of premium brands: During the year, the company leveraged the leader, challenger, explorer framework to successfully grow smartwater in India, where it has become the second-largest premium water brand in the market since its initial launch in 2018. In the explorer and challenger phase, the company leveraged local celebrity endorsements and digital marketing to drive brand edge while expanding distribution in select channels as a premium offering. India is now the fourth-largest market globally for the smartwater brand, with a target to be in 90,000 outlets by the end of 2019.

- Expanding innovation through Coca‑Cola Energy: The company recently announced plans to bring new fans into the energy drink category next year with the U.S. launch of Coca‑Cola Energy. Coca‑Cola Energy and Coca‑Cola Energy Cherry – a flavor available exclusively in the United States – and their zero-calorie counterparts will be available nationwide in 12-oz. sleek cans starting in January 2020. The rollout supports ongoing efforts to deliver more beverage options that meet changing preferences, lifestyles and tastes. It’s also an example of the company’s commitment to move quickly, bring more drinks to the shelf, and "lift and shift" innovations around the world. Coca‑Cola Energy debuted earlier this year in Spain and Hungary and is currently available in more than 25 countries.

- Growing sustainably through package innovation: During the quarter, the company made solid progress on its World Without Waste goals. In the United States, the company announced the goal of removing the equivalent of at least 1 billion virgin PET plastic bottles from its supply chain over the next five years. Dasani, America’s leading mainstream bottled water brand, will roll out a next-generation lineup of recyclable, reusable and package-free options – anchored by the first-ever HybridBottle™, which is made with a mix of up to 50% plant-based, renewable material and recycled PET. The company also announced the expansion of up to 100 Dasani PureFill™ water dispensers leveraging Coca‑Cola Freestyle™ technology in late 2019. Globally, the company now has seven markets where its local water brand is packaged in 100% recycled PET. The company also continues to lightweight its packaging to reduce the amount of virgin PET plastic sourced by the Coca‑Cola system.

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