Coca-Cola Reports Strong Results for Fourth Quarter And Full Year 2018

ATLANTA--(BUSINESS WIRE)--The Coca-Cola Company today reported another quarter of solid operating performance, capping off strong financial results for the year. While reported net revenues declined due to refranchising and currency headwinds, the company delivered organic revenue (non-GAAP) growth within its long-term target for the sixth consecutive quarter, while also gaining value share globally.

"I am pleased with our strong organic revenue and earnings growth in 2018. Our results demonstrate progress in our transformation as a consumer-centric, total beverage company and the power of a more strategically aligned system," said James Quincey, CEO of The Coca-Cola Company. "Coca-Cola has established a strong foundation to capitalize on long-term growth opportunities and drive sustained shareowner value."

Quarterly / Full Year Performance

• Revenues: Net revenues declined 6% to $7.1 billion for the quarter and declined 10% to $31.9 billion for the year. Fourth quarter and full year results were impacted by headwinds of 13% and 17%, respectively, from the combined impact of currency and the refranchising of company-owned bottling operations. Organic revenues (non-GAAP) grew 5% for the quarter, driven by concentrate sales growth of 1% and price/mix growth of 4%. The quarter included one additional day, which resulted in an approximate 1-point benefit to organic revenue (non-GAAP) growth. For the year, organic revenues (non-GAAP) grew 5% driven by concentrate sales growth of 3% and price/mix growth of 2%.
• Margin: Operating margin, which included items impacting comparability, expanded 516 and 585 basis points for the quarter and full year, respectively. Comparable operating margin (non-GAAP) expanded 13 and 385 basis points for the quarter and full year, respectively. Margin expansion was driven by divestitures of lower-margin bottling operations and the company's ongoing productivity efforts. These drivers were partially offset by the impact of the adoption of the new revenue recognition accounting standard and currency, which resulted in an approximate 220 and 160 basis-point headwind for the quarter and full year, respectively.
• Market share: The company continued to gain value share in total nonalcoholic ready-to-drink (NARTD) beverages for the quarter and full year.
• Cash flow: Cash from operations for the full year was $7.3 billion, up 6% from the prior year. Full year free cash flow (non-GAAP) was $6.0 billion, up 14% from the prior year.
• Share repurchases: Full year purchases of stock for treasury were $1.9 billion. Full year net share repurchases (non-GAAP) totaled $442 million.

Company Updates

• Key leadership appointments and fostering a growth culture: In the fourth quarter, the company announced several changes in top leadership, including the election of a new president and chief operating officer, in addition to succession plans for the chief financial officer and the chairman of the board. Within the broader organization, the company made solid progress during the year in renewing its culture by implementing changes to its compensation philosophy – placing a sharper focus on performance and the potential to drive long-term growth. The company also continued to act with more speed and agility, enabled by a new operating model that has given field operations greater decision-making authority and autonomy.
• Tailoring the sparkling portfolio to today's consumer: The company continued to strengthen its sparkling soft drinks portfolio and build consumption rituals through world-class innovation, premiumization and revenue growth management initiatives. In North America, innovation in the iconic Diet Coke brand, along with the continued success of Coca-Cola Zero Sugar, led to an 8-point acceleration in retail value growth for the no-calorie sparkling soft drinks portfolio for the year. The company's strong performance in low- and no-calorie sparkling soft drinks demonstrates the success of its initiatives to help consumers reduce added sugar. Globally, premium innovations, such as Coke Plus Coffee, and revenue growth management initiatives helped drive transactions ahead of 2% volume growth in the sparkling soft drinks portfolio during 2018.
• Growing the total portfolio: The company’s increased speed and agility, coupled with the strength of its distribution system, helped launch approximately 500 products across multiple markets through the lift, shift and scale strategy while also accelerating the elimination of underperforming SKUs during the year. The company also announced several key acquisitions in 2018, including Costa Limited, which provides a platform to build a global coffee business, and a strategic partnership with BODYARMOR, one of the fastest-growing beverage trademarks in the United States.
• Working toward a World Without Waste: In early 2018, the company introduced its World Without Waste initiative, which includes a goal to collect and recycle one bottle or can for each one the company sells by 2030. The company’s progress during the year included establishing or joining 10 global partnerships; announcing four technology advancements, including the opening of PlantBottle technology for use across the industry; and launching water in 100% recycled plastic bottles in four markets.

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