Coca Cola Announces Better Than Expected Earnings

The company continued the legacy of producing better results in all the quarters of the foregoing year.

Before the opening of market on Tuesday, Coca-Cola Company declared its better-than-expected earnings for the fourth and last quarter of the fiscal year 2015. Although it underwent a year-over-year decline of 25%, nevertheless it posted an EPS of $0.38 for the fourth quarter, getting ahead of expected EPS of $0.37. The net income reported by it was $1.67 billion, which reflected the decline of 33%.

In comparison with the past year’s same period revenue of $11.40, the fast moving consumers good company posted a revenue of $10 billion, which although declined by 8% compared to prior year’s same quarter, the results beat the analysts expectation of $9.91 billion revenue. Moreover, the revenue beats analysts’ expectations due to the company’s strategy of price hikes and smaller size of bottles.

Reuters reported that CFO Kathy Waller said, “In the United States, in particular, we have a price-pack architecture strategy promoting the mini cans and the 8-ounce glass bottles.” The fall in the revenue is due to the strong dollar that blew hard on the international markets. If the acquisition, divestitures, and foreign currency impact is excluded, the revenue has been declined about 1%.

The company’s general administrative expenses came down to $3.94 billion by falling around 9.2%. In order to increase the profitability, the organization projected a $3 billion annual savings by 2019. For the same reason, it has undergone job cuts, and the sales of its factories and bottling operations.

Apart from producing impressive financial results, Coca Cola has been planning to do quite a lot for its smooth progression. It announced the accelerated refranchising plans. Muhtar Kent, Chief Executive Officer of Coca-Cola, said, “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.”

During the conference call on Tuesday, the organization told that it would refranchise all of its bottling operations in North America. It projects the action to be completed by the end of 2017, which would be around three years earlier than expected. It has also signed a letter of intent for the same with local Chinese partner, Swire Beverage Holdings Limited and China Foods Limited.

Refranchising will significantly decrease capital needs and bolster the returns for the company. It reported that the sales in China slowed down. In addition to China, the sales in Brazil, Japan, and Mexico also fell down. The market is essential for the organization as in the year 2014, the revenue accumulated from the above-mentioned international market made up one third of Coca Cola Global Sales Volume.

At the market close on Tuesday, its stock price stood at $43.31. According to Reuters, for the year 2016, the company has projected a growth of six to eight percent per share. The Georgian based firm also plans to buy back $2 billion to $2.5 billion per share in the year 2016.