Retail Giant to watch: Coca-Cola Co (NYSE: KO)

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Coca-Cola Co (NYSE: KO) stock rose over 2.3% on 21st July, 2020 (As of  12:38 pm GMT-4; Source: Google finance) post better than expected second quarter of 2020 performance. The firm’s global unit case volume trends have improved sequentially as compared to their April 2020 update. April pointed over 25% while June fall is only 10%. Unit case volume for July month-todate was down mid-single digits globally. The firm is also focusing its investments on growth portfolio by prioritizing brands for consumer reach. They announced plans to roll out a new pouring option to meet consumer needs with its latest Coca-Cola Freestyle technology innovation – contactless, mobile pouring using a smartphone. With this move, consumers can choose and pour drinks in just a few seconds, without creating an account or downloading an app. The mobile experience is rolling out to Coca-Cola Freestyle dispensers across the United States by the end of the year. The firm also came up with first original ad during the pandemic for brand Coca-Cola, by rediscovering joy in sharing a meal with loved ones.

As per the second quarter of 2020 performance, the Revenues fell 28% yoy to $7.2 billion while the Organic revenues (non-GAAP) lost 26% due to pressure in away-from-home channels, which accounts over 50% of the company’s revenues. Revenue performance included a 22% decline in concentrate sales and a 4% decline in price/mix. Operating margin fell to 27.7% as compared to 29.9% in the prior corresponding period. Operating margin (non-GAAP) fell to 30.0% as compared to 30.3% in the prior corresponding period. Operating margin contraction was primarily driven by top-line pressure and currency headwinds, partially offset by effective cost management. The Earnings per share fell 32% to $0.41, while the firm also lost value share in total nonalcoholic ready-to-drink (NARTD) beverages due to pressure in away-from-home channels, where the company has a strong share position. The firm’s Year-to-date cash from operations also fell to 38% yoy to $2.8 billion, while Free cash flow (non-GAAP) was $2.3 billion, down 40%.

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