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Coca-Cola earnings Q4 2018 shows a bad outlook



Coca-Cola on Thursday reported fourth-quarter earnings that met expectations, but that was not enough to temper investors' concerns about its weaker-than-expected outlook for 2019 earnings.

"Clearly that is leading to an EPS growth, which is not what we aspire it, "he said.

The global beverage giant has been battling the currency headwinds, which it said hurt its fourth quarter earnings by 1

0 percent.

Here's what Coke has reported, compared with what Wall Street was expecting, based on a survey by analysts by Refinitiv:

  • Earnings per share : 43 cents vs. 43 cents expected
  • Revenue: $ 7.06 billion vs. $ 7.04 billion expected

Net sales dropped 6 percent to $ 7.06 billion, but still topping expectations of $ 7.04 billion.

The fourth quarter sales of its soft, soft drinks dropped 1 percent, despite its popular Coca-Cola Zero Sugar beverages. once again are seeing double-digit growth.

Unit volume volume for the quarter was unchanged from last year. Quincey attributed the flat volume to focusing on "value over volume" in some markets. He said at the conference call.

"So it's a little softening," he said. "But then it started to pick up, so we started the year well."

Additionally, economic conditions in certain emerging markets, such as Central America, offset growth in India and Central and Eastern Europe. For example, in Argentina, the unit volume volume declined by double digits as the country entered a recession in the second half of 2019.

The penalty giant reported fiscal fourth quarter net income of $ 870 million, or 20 cents per share, up from a loss of $ 2.75 billion, or 65 cents per share, a year earlier. Coke said that freight costs negatively impacted its earnings this quarter. Deputy Finance Director John Murphy, who will take reins from retired CFO Kathy Waller in March, told analysts the company does not expect to see the same year-over-year increase in freight in the U.S. as in 2018.

Excluding items, Coke earned 43 cents per share during the quarter, in line with consensus estimates from Refinitiv.

For fiscal year 2019, Coke is forecasting organic earnings growth of 4 percent.

"We are being prudent in our outlook for 2019, given the multiple reductions in the global economic outlook for 2018 and our own experience in some emerging and developing markets," Quincey said.

Murphy also said the company expects higher interest costs , based on the timing of the Fed's rate hikes, and more significant currency headwinds in the first half of 2019, rather than the back of the year.

As global soda consumption declines, the beverage giant has expanded beyond its core soft-drink business. Last year, it acquired the British chain Costa Coffee for $ 5.1 billion, one of its six acquisitions in 2018. Quincey told analysts on the quarterly conference call that it closed the Costa deal Jan. 3, several months ahead of schedule.

Quincey said that the business has contingency plans for Costa and the rest of its U.K. Businesses.

"It's likely to be just a short-term disruption effect if it really ends up in that scenario and we will manage it through," Quincey said.


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