Coca‑Cola Reports First Quarter 2020 Results; Provides Update on Business Environment Amid Coronavirus Pandemic


Net Revenues Declined 1%;

Organic Revenues (Non-GAAP) Were Even

Operating Income Declined 2%; Comparable Currency

Neutral Operating Income (Non-GAAP) Grew 11%

Operating Margin Was 27.7% Versus 28.0% in the Prior Year;

Comparable Operating Margin (Non-GAAP) Was 30.7% Versus 28.2% in the Prior Year

EPS Grew 65% to $0.64; Comparable EPS (Non-GAAP) Grew 8% to $0.51

ATLANTA, April 21, 2020 – The Coca‑Cola Company today reported first quarter 2020 results and provided insight into how the company is navigating through the ongoing coronavirus pandemic. The Coca‑Cola system continues to work to ensure the safety and support of its employees, consumers, customers and communities during this challenging time.

"We sincerely thank those who have been working to keep all of us safe through the crisis, particularly those on the front lines in the healthcare community. I also want to recognize our system associates, who are ensuring we can continue to supply beverages around the world," said James Quincey, chairman and CEO of The Coca‑Cola Company. "Our approach to navigating the pandemic is grounded in our company’s purpose, which ensures that we continuously strive to make a difference for people in the communities we serve around the world. We’ve been through challenging times before as a company, and we believe we're well positioned to manage through and emerge stronger. The power of the Coca‑Cola system is our greatest strength in times of crisis. The resilience of our people, the equity of our brands and the strength of our bottling partners continue to be competitive advantages in the market."


Quarterly Performance


- Revenues: Net revenues declined 1% to $8.6 billion. Organic revenues (non-GAAP) were even. Revenue performance included even concentrate sales and even price/mix. The quarter included one less day, which resulted in an approximate 1-point headwind to revenue growth.

- Margin: Operating margin, which included items impacting comparability, was 27.7% versus 28.0% in the prior year, while comparable operating margin (non-GAAP) was 30.7% versus 28.2% in the prior year. Solid underlying operating margin (non-GAAP) expansion was partially offset by currency headwinds.

- Earnings per share: EPS grew 65% to $0.64, and comparable EPS (non-GAAP) grew 8% to $0.51.

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

- Cash flow: Cash from operations was $556 million, down 29%. Free cash flow (non-GAAP) was $229 million, down 43%, primarily driven by the impact of one less day in the quarter, currency headwinds and cycling the supplier payment term extensions in the prior year as part of ongoing working capital initiatives.

Business Environment Update Amid Coronavirus Pandemic

The company entered 2020 with solid momentum, coming off strong results in 2019. Through the end of February, the company was growing volume 3%, excluding China, and was on track to achieve its previously provided full year 2020 targets.

In March, as the coronavirus pandemic spread globally, countries meaningfully increased social distancing and shelter-in-place mandates. In markets around the world, the company subsequently saw significant changes in consumer purchase patterns, notably substantial declines in away-from-home channels. In at-home channels, the company witnessed early pantry loading in certain markets, followed by more normalized demand levels, along with a sharp increase in e-commerce. Given that away-from-home channels represent approximately half of the company’s revenues, the company expects the net effect of these consumer purchase patterns to have a significant impact on second quarter results. For context, since the beginning of April, the company has experienced a volume decline globally of approximately 25%, with nearly all of that decline coming in away-from-home channels.

The ultimate impact on the second quarter and full year 2020 is unknown at this time, as it will depend heavily on the duration of social distancing and shelter-in-place mandates, as well as the substance and pace of macroeconomic recovery. However, the impact to the second quarter will be material.

The company believes the pressure on the business is temporary and remains optimistic on seeing sequential improvement in the back half of 2020. The company, along with its bottling partners, is continuing to adapt quickly to the current environment, with a focus on mitigating the near-term impact while positioning for success coming out of the crisis.

Company Updates

- Delivering on key priorities amid the coronavirus pandemic: The health and safety of Coca‑Cola system employees remains the company's highest priority. Around the world, local teams continue to follow guidance from authorities. These measures include additional cleaning and sanitization routines in system facilities and requiring most office-based employees to work remotely. After health and safety, business continuity is of utmost importance. The Coca‑Cola system has developed knowledge-sharing routines and processes, including how to manage potential supply chain challenges. At this time, the system does not foresee material disruptions in finished goods production or distribution.

- Supporting communities around the world: The Coca‑Cola system has made contributions to support relief efforts in markets impacted across the globe. The system is committed to contributing more than $100 million and is focused on community relief programs, medical supplies and equipment during the outbreak phase, as well as on developing other actions for the recovery phase in markets hit hardest by the pandemic. The commitments to date include $40 million in charitable grants from The Coca‑Cola Foundation.

- Adapting business strategy: The company is moving with speed to continue to best serve its customers and consumers while reviewing every aspect of its business and redirecting spending to areas where it can be the most effective. In partnership with bottlers and retail customers, the company is working to ensure adequate inventory levels in key channels, in addition to prioritizing core brands and key packages. The company is also increasing investments in e-commerce to support both retailers and meal delivery services, shifting toward package sizes that are fit-for-purpose for online sales, and redeploying consumer and trade promotions toward digital.

- Business & Sustainability Report: In 2019, the company laid out its vision to craft the brands and choice of drinks that people love, to refresh them in body and spirit, and to do so in ways that create a more sustainable business and better shared future. As the world faces unprecedented challenges, the company's purpose and vision is more important than ever. On April 22, the company will publish its 2019 Business & Sustainability Report, reflecting a continued journey toward driving sustainable business practices.


- All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period.

- All references to volume and volume percentage changes indicate unit case volume, unless otherwise noted. All volume percentage changes are computed based on average daily sales, unless otherwise noted. "Unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings), with the exception of unit case equivalents for Costa non-ready-to-drink beverage products which are primarily measured in number of transactions. "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 or consumers.

- "Concentrate sales" represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in equivalent unit cases) sold by, or used in finished beverages sold by, the company to its bottling partners or other customers. For Costa non-ready-to-drink beverage products, "concentrate sales" represents the amount of coffee beans and finished beverages (in all instances expressed in equivalent unit cases) sold by the company to customers or consumers. In the reconciliation of reported net revenues, "concentrate sales" represents the percent change in net revenues attributable to the increase (decrease) in concentrate sales volume for the geographic operating segments and the Global Ventures operating segment after considering the impact of structural changes. For the Bottling Investments operating segment, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes. The Bottling Investments operating segment reflects unit case volume growth for consolidated bottlers only.

- "Price/mix" represents the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred."

- First quarter 2020 financial results were impacted by one less day as compared to the same period in 2019, and fourth quarter 2020 financial results will be impacted by two additional days as compared to the same period in 2019. Unit case volume results for the quarters are not impacted by the variances in days due to the average daily sales computation referenced above.

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