The Coca-Cola Company “resilient” but “not crisis proof”

Posted by Isobel Drake on 13th February 2009

The Coca-Cola Company overnight reported that they had again exceeded growth targets, with unit case volume growth of 4 per cent in the fourth quarter and 5 per cent for the full year propelling them to a yearly profit of US$5.8 billion. The profit was, however, down 3 per cent on last year’s figures due to the impact of one-time charges.

Sparkling beverages increased unit case volume 2 percent in both the quarter and full year, the Company noted. While stalwarts Coca-Cola, Fanta and Sprite contributed to strongly to the results, increasing unit case volume 2 per cent, 3 per cent and 6 per cent, respectively, for the year.

Still beverage unit case volume increased 11 per cent in the quarter and 13 per cent for the full year, led by strong growth across the portfolio, including juice and juice drinks, teas, active lifestyle and water brands. Their emerging markets were assisting them as their home market of America continued to be impacted by a recession.

Coca-Cola’s Russia, Ukraine and Belarussian boss Zoran Vucinic told a news conference on Wednesday that they were pursuing an aggressive growth strategy in Russia, which would see them spend US$1.2 billion (A$1.83b) over the next 3-5 years.”The company can afford to have aggressive positions in Russia,” he said. “The market of non-alcoholic beverages is growing during (the downturn) and we want to continue investing in the Russian market.”

The Company remained on track to deliver $500 million in annualised savings from productivity initiatives by year-end 2011, with the continued acceleration of these efforts will enable cash flows to be redeployed to drive investments for growth.

“Our performance in the fourth quarter was very solid,” Muhtar Kent, President and CEO of The Coca-Cola Company, commented. “Our fourth quarter and full year 2008 results reflect both the universal appeal of our global brands and the unrivalled reach of one of the world’s leading consumer products distribution systems. For the year, we again exceeded our long-term growth targets despite a very challenging economic environment. And importantly, we gained volume and value share in most of our leading markets through solid execution of our strategies.”

Mr Kent added that 2008 saw them heighten their focus on investments that can generate more sustainable results in the years ahead. “Working in close collaboration with our bottling partners, we successfully accelerated actions, refocused investments and intensified our disciplined execution to drive results,” he advised. “We also made significant gains in realigning our organisational structure to generate greater productivity and in rewiring our business for sustainable results.”

“While certainly not crisis proof, as no company is, I do believe our global business model is relatively resilient, as we bring simple moments of pleasure to our consumers, nearly 1.6 billion times a day, for cents at a time. We recognise that 2009 will bring many unique challenges to us and our consumers, customers, and bottling partners. Yet, I believe that our solid brand and business fundamentals – together with a fundamentally sound balance sheet, robust cash generating model and strong global bottling system – provide a sound foundation for our management team to continue driving long-term sustainable growth,” Mr Kent concluded.