Structural changes coupled with the impact of currency rates contributed to a 15% decline in income during the first quarter at The Coca-Cola Co.
For the quarter ended March 29, the company had income of $1,751 million, equal to 39c per share on the common stock, which compared with income of $2,054 million, or 45c per share, during the same quarter of the previous year. Net operating revenue was $11,035 million, down 1% from $11,137 million during the same quarter of the previous year.
“I am pleased with our first-quarter performance results, having once again delivered solid growth against the backdrop of a still uncertain global economy,” said Muhtar Kent, chairman and chief executive officer. “Guided by our 2020 Vision, our roadmap for winning together with our global system bottling partners, we enter 2013 and the fourth year of our journey to 2020 focused and on track to reach our goals.”
Structural changes affecting results include the deconsolidation of the Philippine bottling operations in 2013 and acquisitions of the Vietnam, Cambodia and Guatemala bottling operations in 2012.
The company also reported worldwide volume growth of 4% for the first quarter with 3% growth in Coca-Cola Americas and 5% growth in Coca-Cola international. Emerging markets showed strong volume growth with Thailand up 18%, India up 8%, Russia up 8%, Mexico up 3% and Brazil up 3%.
Additionally, the company announced a new beverage partnership model in the United States. The new partnership involves five bottlers and new expended territories. The bottlers include Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United, Inc., Swire Coca-Cola USA, Coca-Cola Bottling Company High Country and Corinth Coca-Cola Bottling Works, Inc. The company and the bottlers will develop more rational and contiguous operating territories. In addition, the partnership will grant exclusive territory rights and the sale by Coca-Cola Refreshments of distribution assets and cold drink equipment. A finished goods model under which production assets will remain with Coca-Cola Refreshments, an improved, more integrated information technology platform and a beverage agreement that supports the evolving operating model are other benefits of the partnership.
Financial terms of the transaction were not disclosed. Transactions might include an outright territory sale, a territory swap or a sub-bottling arrangement.
“We believe that unique competitive advantage lies in a U.S. system that can act with the speed of an integrated, lower-cost national business enabled by deep local knowledge, community connections and the outstanding commercial capabilities of a strong local bottling system,” said Steve Cahillane, president of Coca-Cola Americas.
“This new architecture that we are beginning to implement ensures a meaningful role for current and future aligned bottling partners in the U.S.”
