Coca-Cola Chief Financial Officer Kathy Waller shared her thoughts on the company’s fourth quarter and full-year 2015 results, released earlier today.

As you review our 2015 Q4 and full-year performance, what is the main takeaway that stands out in your mind?

The main takeaway is that we achieved our key objectives of improving our top-line revenue and delivering profits in line with our expectations for the year. When we started 2015, we said it would be a transition year as we began to implement plans to reinvigorate our growth and increase profitability. Even in a year with very challenging macroeconomic factors working against us, we delivered our plan and accelerated our business. These results are thanks to the focus and determination of people all across our system. We continue to be in a period of significant change as we refocus on our core business of building brands and leading strong bottlers around the world. At the same time, we are focused on improving our top and bottom line results. That’s not easy. So I want to personally say thank you to everyone across our system for making this happen.

What is the most exciting opportunity or challenge ahead as we start 2016?

Our focus on revenue is beginning to take hold. You can see that in the 2% growth in global price/mix last year. It is critical to our company’s success to shift our focus from volume to value and make that part of our culture and align our entire business system against this goal. While we’ve made good progress so far, this remains a key focus for the year ahead, and far into the future. 

I would say the big news from our earnings today is the announcement of the acceleration of our refranchising plans. With these accelerated plans, we will move from a system where about 18% of our volume was produced by company-owned bottlers in 2015 to about 3%. While we know this means change for a lot of people in our system, it is a critical initiative as we align our system for future growth and get back to the historical model of The Coca-Cola Company as a brand-building company.

CCNA Refranchising: combined map

What about volume? We hear more and more about revenue growth. Is volume still important?

Volume is just one lever that drives revenue. When you think about what makes up revenue growth, it’s three things: volume, price and mix – with ‘mix’ referring to the types of packages and products we sell, and the fact that we operate in more than 200 countries around the world. So, yes, volume is still important. But it’s only part of the equation.

In 2015 we achieved balanced volume growth across our still and sparkling portfolio with full-year total growth of 2% and, within that, sparkling growth of 1% and still growth of 5%. What’s most important to look at, though, is the profitability and sustainability of that growth. This is represented by the 2% growth in global price/mix that we saw in the quarter and the full year. This demonstrates that our actions continue to generate more revenue and profit from the volume we sold in the market.

If you are saying we delivered on our plans for the quarter and the year, why do some reports indicate that our revenues were down in the quarter?

Like many consumer goods companies, we use an accounting calendar for our reporting that divides the year into four 13-week quarters, rather than simply using the calendar months. In some years this leads to a mismatch on the number of days when you compare one quarter with the same from the previous year. That happened in the first and fourth quarters of 2015.  In the fourth quarter, we had six fewer days from an accounting perspective than in the prior year. As you know, we generate a lot of cash selling beverages each day, so that makes a big impact when you compare quarters with a different number of reported days. That is the main reason why our reported revenues for the quarter declined – there were simply fewer days. But when you annualize this, it evens out, which is why it’s most meaningful to look at our full-year results rather than just the fourth quarter when we had six fewer days or last year’s first quarter when we had six extra days.

On an annual basis, we saw growth in both our underlying revenue and profits with full-year organic revenue up 4% and income, when adjusted for currency and structural items, up 6% – both solid results.

We talk a lot about 'organic revenue' as a proof point of how we’re doing. What is organic revenue?

Organic revenue is a term used by consumer goods companies to show how we are growing topline sales year-over-year in our core business. It strips out the impact of changes in foreign currency exchange rates and any impact from acquisitions or divestitures. 

Kathy Waller

Coca-Cola Chief Financial Officer Kathy Waller

What part of the world saw the strongest growth last year? 

Given our focus on driving revenue and profit growth, the North America market saw particularly strong results.  North America delivered its strongest performance in three years, driving 4% topline growth for the full year. This shows that our strategic focus on driving consumption in smaller package sizes is continuing to pay off. In fact, for the full-year, purchase transactions grew 3%, outpacing 1% unit case volume growth, which means more people are reaching for a mini-can or an 8 oz. glass bottle than ever before. 

As you look back at 2015, were there any particular beverages or brands that were the biggest contributors to global growth?

We continued to see balanced growth across the still and sparkling portfolio. Our strategy is to invest to profitably grow both sparkling and still brands. While still beverages will continue to grow at faster rates, we continue to see growth in our global sparkling beverage portfolio. 

You said 2015 was a transition year. What does it mean now that we are out of 2015 and starting 2016?

The good news is that we did what we set out to do in the transition year and delivered on our plan. As we look into 2016, despite continued challenging global market conditions, we remain committed to achieving underlying performance in line with our long-term growth model. 

As always, it’s important that we stay focused on delivering our business plans to achieve these targets, recognizing that we will continue to face global macroeconomic pressures that are not always predictable. Given this, we must continue to focus on what we can control – investing behind our brands, improving our market execution and delivering on our productivity efforts.

Note: This Q&A includes certain "non-GAAP financial measures" as defined under U.S. federal securities laws. Refer to our fourth quarter and full year 2015 earnings release issued on February 9, 2016, available on the Company's website at (in the “Investors” section), for full financial results and a reconciliation of non-GAAP financial measures.

Forward-Looking Statements
This Q&A may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Company’s historical experience and our present expectations or projections. These risks include, but are not limited to, obesity concerns; water scarcity and poor quality; evolving consumer preferences; increased competition and capabilities in the marketplace; product safety and quality concerns; perceived negative health consequences of certain ingredients, such as non-nutritive sweeteners and biotechnology-derived substances, and of other substances present in our beverage products or packaging materials; increased demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging and developing markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with our bottling partners; a deterioration in our bottling partners' financial condition; increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters; increased or new indirect taxes in the United States or in other major markets; increased cost, disruption of supply or shortage of energy or fuels; increased cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the availability of our products; an inability to protect our information systems against service interruption, misappropriation of data or breaches of security; unfavorable general economic conditions in the United States; unfavorable economic and political conditions in international markets; litigation or legal proceedings; adverse weather conditions; climate change; damage to our brand image and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues; changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations; changes in accounting standards; an inability to achieve our overall long-term growth objectives; deterioration of global credit market conditions; default by or failure of one or more of our counterparty financial institutions; an inability to timely implement our previously announced actions to reinvigorate growth, or to realize the economic benefits we anticipate from these actions; failure to realize a significant portion of the anticipated benefits of our strategic relationships with Keurig Green Mountain, Inc. and Monster Beverage Corporation; an inability to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners experience strikes, work stoppages or labor unrest; future impairment charges; multi-employer plan withdrawal liabilities in the future; an inability to successfully integrate and manage our Company-owned or -controlled bottling operations; an inability to successfully manage the possible negative consequences of our productivity initiatives; global or regional catastrophic events; and other risks discussed in our Company’s filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2014 and our subsequently filed Quarterly Reports on Form 10-Q, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements.