The Coca-Cola Company today reported second quarter 2016 operating results. Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company said, “Despite challenging macroeconomic conditions, structural changes and foreign exchange headwinds which contributed to a 5% decline in reported revenues, we delivered 3% organic revenue growth, gained value share in total nonalcoholic ready-to-drink beverages, expanded our operating margins and grew profits in line with our expectations. Strong performance in some of our largest and most developed markets, including the United States, Mexico and Japan, was offset by difficult external conditions in many of our emerging and developing markets, including China and Argentina. These factors combined to put pressure on our volume and top-line performance in the quarter, especially where we own bottling businesses. In these international operations where external headwinds have proven to be more severe than originally forecast, we are taking action by reassessing local market initiatives where needed and continuing our efforts in driving productivity.
“As we continue the transformation of our business, I am encouraged by our core business performance which grew ahead of our consolidated organic revenues in the quarter. We expect this to continue for the balance of the year as we remain confident in our segmented revenue growth strategy, our innovation pipeline, and efforts to increase and improve our advertising.”
NOTES
- All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period.
- The Company reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, management uses non-GAAP financial measures, including, but not limited to, organic revenues, comparable currency neutral income before taxes and comparable currency neutral earnings per share, in making financial, operating, compensation and planning decisions and in evaluating the Company’s performance. Management believes that these non-GAAP financial measures provide users with additional meaningful financial information that should be considered when assessing our ongoing performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. The Company’s non-GAAP financial information does not represent a comprehensive basis of accounting. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.
- “Comparable currency neutral income before taxes” is a non-GAAP financial measure that excludes or otherwise adjusts for items impacting comparability and the impact of changes in foreign currency exchange rates. For details on these adjustments, refer to the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.
- “Comparable currency neutral income before taxes (structurally adjusted)” is a non-GAAP financial measure that excludes or otherwise adjusts for items impacting comparability, the impact of changes in foreign currency exchange rates and the impact of structural items. For details on these adjustments, refer to the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.
- “Concentrate sales” represents the amount of concentrates, syrups, beverage bases and powders sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.
- “Concentrate sales/reported volume” represents the percent change in net revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments (expressed in equivalent unit cases) after considering the impact of structural changes. For our Bottling Investments operating segment, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes. Our Bottling Investments operating segment reflects unit case volume growth for consolidated bottlers only, which is computed on a reported basis.
- “Organic revenues” is a non-GAAP financial measure that excludes or has otherwise been adjusted for the impact of changes in foreign currency exchange rates and acquisitions, divestitures and structural items, as applicable. For details on these adjustments, refer to the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.
- “Core business” represents the combined performance from the Eurasia and Africa, Europe, Latin America, North America, Asia Pacific and Corporate operating segments offset by intersegment eliminations.
- “Sparkling beverages” means NARTD beverages with carbonation, including carbonated energy drinks and waters.
- “Still beverages” means nonalcoholic beverages without carbonation, including noncarbonated waters, flavored waters and enhanced waters, juices and juice drinks, teas, coffees, sports drinks, dairy and noncarbonated energy drinks.
- 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 24 eight ounce servings of finished beverage. “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.
- First quarter 2016 financial results were impacted by one less day, while fourth quarter financial results will be impacted by two additional days. Unit case volume results for the quarters are not impacted by the variance in days due to the average daily sales computation referenced above.
