‘Our business was built for (volatile) times like these’, Coke CEO

By Ben Bouckley

- Last updated on GMT

Related tags Volume growth Revenue Coca-cola Muhtar kent

‘Our business was built for (volatile) times like these’, Coke CEO
Coca-Cola Company CEO Muhtar Kent says the company fourth quarter (Q4) and full-year 2011 growth – despite economic volatility, volatile commodity markets and natural disasters – testifies to the strength of the business.

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.

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