Coca-Cola (KO) expects recovery to be asynchronous through the year

Shares of The Coca-Cola Company (NYSE: KO) have gained 16% over the past 12 months. Shares stayed in green territory until market close on Monday after the company reported better-than-expected earnings results for the first quarter of 2021. Looking ahead, the soft drinks giant expects a full recovery to remain asynchronous around the world.

Quarterly performance

Net revenues grew 5% to $9 billion while organic revenues grew 6%, driven by higher concentrate sales. GAAP EPS fell 19% to $0.52 while adjusted EPS grew 8% to $0.55. Both the top and bottom lines surpassed expectations.

Trends

During the quarter, Coca-Cola benefited from strength in at-home channels but the pandemic-related weakness in the away-from-home channels continued to weigh on results. The company lost value share in total non-alcoholic ready-to-drink beverages due to negative channel mix caused by pressure in away-from-home channels.

Volume trends witnessed a steady improvement through each month of the quarter helped by recovery in markets where the pandemic-related restrictions eased a bit. A full recovery remains asynchronous throughout the world.

In March, volumes were back to pre-pandemic levels even though the away-from-home channel stayed pressured. The company expects to see more markets return to normal later this year.

In Q1, Coca-Cola witnessed strong growth in developing and emerging markets such as China and India but this was offset by pressure in developed markets such as the US and Europe. Sparkling soft drinks grew 4% helped by growth in China, India and Latin America.

China saw traffic and volume back to pre-pandemic levels while in India and Southwest Asia, the company saw strong growth helped by marketing and distribution expansion with 250,000 new outlets and 45% more new coolers.

Coca-Cola is also betting big on coffee this year. The company is expanding its ready-to-drink coffee in China and is working on complementing its Georgia coffee brand in Japan.

Outlook

For the full year of 2021, Coca-Cola expects organic revenue to grow in the high single digits and comparable EPS to grow in the high single digits to low double digits.

Click here to read the full transcript of Coca-Cola Q1 2021 earnings conference call