‘Our business was built for (volatile) times like these’, Coke CEO
Coke’s net income for the full year ending December 31 slumped to $8.572bn ($11.809bn: 2010), but the company grew overall net operating revenues significantly from $35.119bn (2010) to $46.642bn in 2011.
Kent said: “Even as we believe that global market volatility will continue in the near term, the breadth of our global footprint and the strength of our brands create a resilient business that was built for times like these.”
Fourth quarter slowdown?
Discussing Coke’s results in a later call with analysts, Mark Swartzberg from Stifel, Nicolaus & Co asked Kent about unit volume growth in emerging markets (where per capita consumption of Coke brands is below 150 8oz/227g servings a year) of 4% in Q4.
Swartzberg said: “You highlighted that was a plus 4% in the quarter. It was plus 6% for the year. So is it possible to generalize on what’s going on in those less developed markets, and some of the plans you have to improve on that plus 4%?”
Kent said he did not think it was possible to draw any trend. “We’re pleased with our [global] volume growth of 3% [in Q4]. We’re cycling an organic volume growth of 5% in the prior year, and full year volume is 4% [excluding US cross-licensed brands such as Dr Pepper, which Coke distributes], at the organically high-end of our long-term growth target for the year.”
Balanced growth achieved
Balanced growth across all geographies was achieved with “not only just a very volatile economic environment, a volatile commodity environment, but also one-offs like the issue in Japan, the flooding in Thailand, right-sizing in a huge market like China, where now our transactions are significantly ahead of our volume,” Kent said.
He also noted the political volatility in the Middle East, and continued economic turbulence in South Eastern Europe, and Greece in particular.
Coke’s full-year highlights included global volume growth of 5% for the year, international volume growth for Q4 of 4% and sluggish US volume growth of 1%.
However emerging markets such as India and China posted double-digit growth in Q4: the Coca-Cola brand alone grew 13% and 15% respectively in these nations, while Germany saw a 9% uplift.
The company said its full-year net revenue grew 33%, reflecting the acquisition of Coca-Cola Enterprises (CCE’s) former US operations in Q4 of 2010.
A four-year ‘productivity’ program had led to annual savings of over $500m, Coke added, and the firm said it would reinvest these savings in ‘brand-building initiatives’ to combat commodity inflation.
Coke's closest rival PepsiCo is due to launch its own Q4 and full-year results tomorrow.
