Monday, July 18, 2011

Coca-Cola Co. (NYSE: KO): Q2 Earnings Preview 2011

Coca-Cola Company (NYSE: KO) is scheduled to release its second-quarter earnings before the opening bell on Tuesday, July 19, 2011. Analysts, on average, expect the company to report earnings of $1.16 per share on revenue of $12.40 billion. In the year ago quarter, the company reported earnings of $1.06 per share on revenue of $52 billion.

The company manufactures, distributes and markets non-alcoholic beverage concentrates and syrups. It also manufactures, or authorizes bottling partners to manufacture, fountain syrups, which it sells to fountain retailers such as restaurants and convenience stores, which use the fountain syrups to produce finished beverages for immediate consumption, or to fountain wholesalers or bottlers, which in turn sell and distribute the fountain syrups to fountain retailers. In addition, it manufactures certain finished beverages, such as juices and juice drinks and water products, which it sells to retailers directly or through wholesalers or other distributors, including bottling partners.

The company has now seen net income rise in three straight quarters. Revenue has risen the past four quarters.

In the preceding first quarter, the Atlanta, Georgia-based company's net income was $1.90 billion or $0.82 per share from $1.61 billion or $0.69 per share, in the year-earlier quarter. On an adjusted basis, the company earned 86 cents per share in the fourth quarter. Revenue surged 40 percent to $10.52 billion from $7.53 billion in the year-ago quarter. Analysts, on average, expected the company to report earnings of $0.72 per share on revenue of $9.75 billion. 

At its last earnings call in April, the company noted that the integration efforts of Coca-Cola Refreshments are on schedule, with expected 2011 net cost synergies of $140 to $150 million.Also, company-wide productivity initiatives are on plan and on track to achieve targeted $500 million in annualized savings by year-end 2011.

Industrywide sales of carbonated soft drinks had been falling in the United States even before the recession slammed the brakes on consumer spending. Some consumers, taking heed of growing awareness of nutritional health, opted for drinks such as bottled water, juice and tea.

However, Coca-Cola is expanding agressively in international market, especially emerging markets, to improve revenue growth. The soft drinks maker is planning to more than double its number of bottling plants in China over the coming decade as part of the group's aim to triple the size of its sales to the country's rapidly emerging middle class. Coke derives more than three-quarters of its revenue from international markets, and is therefore able to offset falling sales in the United States with strong growth in emerging markets like India, China and Brazil. Coca-Cola executives say they expect 60 per cent of the new growth to come from China, India and other emerging markets, with only 15 per cent from developed markets.

Last year, Coca-Cola Co unveiled goals that call for the revenue generated by the company and its bottlers to double to roughly $200 billion by 2020, with profit margins increasing. Coke also said it hopes to more than double the number of soft drink servings it sells to over 3 billion per day by the end of 2020.

Recently, the company said that it plans to double its system revenue from 2010 to 2020 thus accomplishing in ten years what has taken the first 125. 

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