ATLANTA, Feb. 9, 2016 – The Coca-Cola Company today reported fourth quarter and full-year 2015 operating results. Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company said, "In late 2014, we laid out a clear five-point plan to reinvigorate growth and 2 increase profitability. In 2015, a transition year, we delivered on this plan despite an increasingly challenging global macroeconomic environment. Our fourth quarter performance was a testament to the action we took as the Company continued to deliver solid pricing and unit case volume growth, culminating in 4% organic revenue growth for the full year. Importantly, this topline growth was led by our flagship market of North America, which delivered its strongest annual performance in three years. "Today, building on our top-line momentum and the success of refranchising efforts to date in North America, we have announced that we are accelerating the pace and scale of our system transformation with plans to refranchise 100% of Company-owned North American bottling territories by the end of 2017, including all of the cold-fill production facilities. We are also announcing that we have entered into a non-binding letter of intent to refranchise our bottling operations in China to our existing partners China Foods Limited, part of COFCO Limited, and Swire Beverage Holdings Limited, building on other recent global refranchising initiatives in Europe and Africa. "This acceleration of our global refranchising marks a step change in our efforts to refocus The Coca-Cola Company on its core business of building strong, valuable brands and leading a system of strong bottling partners. When this transformation is complete, we will look very different than we do today. Expanding Coca-Cola bottlers in various regions will grow in terms of revenue, employment and reach as we transition Company-owned operations to the franchise system. The Coca-Cola Company will return to its focus as a higher margin, higher return and less capital intensive operation. With the accelerated refranchising plans announced today, we will move from a system where about 18% of our volume was produced by Company-owned bottlers in 2015 to about 3%. "Looking forward to 2016, we remain committed to achieving underlying performance in line with our long-term growth model and delivering long-term, sustainable value to our system and shareowners."
Highlights
- Full-year reported net revenue declined 4% while organic revenue grew 4%. Reported net revenue and organic revenue declined 8% and 1%, respectively, in the quarter, primarily due to the impact of six fewer days in our reporting calendar.
- Global volume grew 3% in the quarter and 2% for the full year.
- Global price/mix grew 2% in the quarter and the full year, reflecting strong execution against our strategic initiatives.
- Gained global value share in nonalcoholic ready-to-drink beverages in both the quarter and full year.
- Remain committed to the previously announced $3 billion productivity initiative, even with the impact of accelerated refranchising plans.
- Expect full-year 2016 comparable currency neutral EPS growth of 4% to 6% including the impact of 3 to 4 points of structural headwind, primarily due to refranchising, on comparable currency neutral income before taxes.
2015 Operating Review
- The organic revenue decline in the quarter was primarily driven by the impact of six fewer days. After adjusting for the six fewer days in the quarter, concentrate sales were mostly in line with unit case sales. Concentrate sales growth and unit case sales growth were mostly in line for the full year as well. We delivered positive price/mix of 2% in the quarter and the full year due to effective global execution of our price and pack strategies. In the quarter, we gained global value and volume share in nonalcoholic ready-to-drink (NARTD) beverages.
- Global sparkling beverage volume growth in the quarter was driven by 1% growth in brand Coca-Cola, 3% growth in Sprite and 7% growth in Coca-Cola Zero, partially offset by a 5% decline in Diet Coke/Coke Light. We gained global value and volume share in sparkling beverages in the quarter. Full-year sparkling beverage volume growth was driven by 1% growth in brand Coca-Cola, 3% growth in Sprite and 6% growth in Coca-Cola Zero, partially offset by a 6% decline in Diet Coke/Coke Light.
- Global still beverage volume growth in the quarter was driven by 8% growth in packaged water, 6% growth in ready-to-drink tea, 5% growth in juice and juice drinks and 2% growth in sports drinks. We gained global value and volume share in still beverages in the quarter. Full-year growth was led by growth of 8% in packaged water, 4% in ready-to-drink tea, 3% in ready-to-drink coffee and 2% in sports drinks.
- Comparable currency neutral income before taxes (structurally adjusted) lagged organic revenue growth in the quarter primarily due to lower equity income and a decrease in net 4 interest income. Full-year comparable currency neutral income before taxes (structurally adjusted) outpaced organic revenue growth due to gross margin expansion and the impact of our ongoing productivity initiatives, partially offset by increased marketing investments, a decrease in net interest income and lower equity income. Our productivity initiatives remain on track and they provided financial flexibility to help us achieve our stated goals in 2015 and reinvest in our business.
- The reported effective tax rates for the quarter and full year were 19.6% and 23.3%, respectively. The underlying effective tax rate was 22.5% for the quarter and full year. The variance between the reported rate and the underlying rate was due to the tax effect of various items impacting comparability, separately disclosed in the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.
- Reported EPS was $0.28 and comparable EPS was $0.38 in the quarter. Items impacting comparability decreased reported EPS by a net $0.10 and were primarily related to noncash charges related to refranchising certain territories in North America and costs associated with our previously announced productivity program.
- Fluctuations in foreign currency exchange rates resulted in a 13 point headwind on comparable operating income and a 10 point headwind on both comparable income before taxes and EPS in the quarter. Full-year fluctuations in foreign currency exchange rates resulted in an 11 point headwind on comparable operating income and an 8 point headwind on both comparable income before taxes and EPS.
- Full-year cash from operations was $10.5 billion, down 1%, primarily due to the unfavorable impact from foreign currency exchange rates and the impact of refranchised territories in North America, partially offset by the efficient management of working capital.
- Full-year net share repurchases totaled $2.3 billion, in line with our previously communicated guidance. Full report.
