Beverage Company To Watch: Coca-Cola Co (NYSE: KO)

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Coca-Cola Co (NYSE: KO) stock rose 0.64% on 20th April, 2021 (as of 12:37:07 UTC-4 · USD; Source: Google finance) after the company posted better than expected results for the first quarter of FY 21. The company is focusing on streamlining the growth portfolio, actively and thoughtfully transitioning brands to more powerful trademarks using a phased approach to bring the consumer with the company, and are maximizing shelf space for new product launches and higher velocity products to drive higher quality growth. Further, the company’s big bets for 2021 include ongoing work to scale the coffee platform under Costa. KO is expanding ready-to- drink coffee in China and taking a portfolio approach to complement the powerful Georgia coffee brand in Japan. They are also rolling out an enhanced formula and package design for Coca-Cola Zero Sugar this month in Europe.

KO in the first quarter of FY 21 has reported the adjusted earnings per share of 55 cents, beating the analysts’ estimates for the adjusted earnings per share of 50 cents. The company had reported the adjusted revenue growth of 5 percent to $9.02 billion in the first quarter of FY 21, beating the analysts’ estimates for revenue of $8.63 billion, according to IBES data from Refinitiv.

Meanwhile, the soda business is unlikely to see full recovery until people are back at restaurants and amusement parks worldwide, buying overpriced hot dogs and giant-sized soft drinks. The uneven reopening pace is showing up in the results as the recovery remains “asynchronous” around the world, the company said. Unit case volume has fallen down 6% in North America, but up 9% in Asia Pacific. Globally, the case unit volume was flat.

On the other hand, the company plans to sell a portion of the Coca-Cola Beverages Africa bottling business through an initial public offering within the next 18 months. The standalone listing for CCBA is expected to enable the bottler to build on its growth trajectory and access capital independently to meet the investment needs of the business, which is good for stakeholders across Africa. An IPO of Coke’s stake could value the African business at approximately $6 billion, as per Bloomberg. The company, which owns 66.5% of the bottling company, didn’t specify how much of its stake it intends to sell.

KO has reaffirmed its forecast for organic sales percentage growth of high single digits in 2021 and comparable earnings-per-share expansion of high single digits to low double digits. The company slightly trimmed its expectations for the impact of currency benefits on net revenue and comparable earnings.

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