According to the financial report, Coca Colas revenue in the third quarter was 8.652 billion US dollars, down 9% year on year. At the same time, Coca Cola also said that affected by the health incident, it is unable to reasonably estimate the companys financial and operating results for the whole year.
Both revenue and net profit declined
The stock price rose instead of falling
According to the third quarter financial report of Coca Cola, during the reporting period, Coca Colas revenue decreased by 9% to 8.7 billion US dollars, compared with 9.5 billion US dollars in the same period of last year, and the net profit was 1.737 billion US dollars, which was 2.593 billion US dollars in the same period of last year.
However, it is worth noting that Coca Colas operating profit margin rose instead of falling, which was 26.6% in the third quarter and 26.3% in the same period last year; the comparable operating profit margin (non GAAP) was 30.4% and 28.1% in the same period last year.
At the same time, affected by the epidemic, the suspension of some restaurants and large-scale sports activities in Europe reduced the outdoor sales of Coca Cola. The market expected that the revenue of Coca Cola in the third quarter was only 8.36 billion US dollars and the net profit was 2.035 billion US dollars. Therefore, although Coca Colas revenue and net profit in the third quarter decreased compared with the same period last year, they still exceeded the market expectations.
Affected by the news, Coca Colas share price rose instead of falling. As of press release, Coca Cola rose 1.65% to $50.81.
Cut half of its brands
4000 job cuts
According to the financial report, in terms of business regions, Coca Colas revenue in North America reached 3.088 billion US dollars, which is still one of the most important revenue regions of Coca Cola, with pre tax profit of $738 million; Europe, the Middle East and Africa had revenue of $1.693 billion, ranking second, but the pre tax profit was as high as $925 million, surpassing the North American market; and the Asia Pacific market ranked at $1.334 billion Third, with a pretax profit of $575 million.
Compared with the same period last year, the revenue of North America market changed little, only a small decrease of 2%, but the revenue of Latin America decreased by 23% year-on-year, with the largest decline, followed by the Asia Pacific market, with a year-on-year decrease of 9%.
The first confirmed product to be discontinued is Zico coconut water, while Coca Cola plans to stop selling Huberts lemonade in retail stores and close its business of odwala juice and smoothies.
In addition, Coca Cola will withdraw a series of underperforming beverages from its global portfolio by December 31. These brands include the American markets tab sugar free soda and Coca Cola life.
In the U.S. market, Coca Colas other withdrawn brands include juice oddwalla, coconut water Zico and dietcoke feisty cherry, as well as regional products such as Northern Neck ginger beer and Delaware punch. Vegitabeta (Japanese market) and Kuat (Brazil market) are one of the products that Coca Cola withdrew from its international product portfolio.
In addition to cutting back on products, Coca Colas business restructuring strategy also includes restructuring the companys internal structure and streamlining personnel.
Coca Cola said on August 28 that it would lay off staff globally as part of its restructuring.
Although it did not disclose details of the layoff plan, Coca Cola said it would offer voluntary exit plans to 4000 employees in the United States, Canada and Puerto Rico. In North America, eligible employees are employees who were employed on or before September 1, 2017.
As of December 31, 2019, Coca Cola has 86200 employees, including about 10100 U.S. employees.
Coca Colas market performance in China is still brilliant.
After the outbreak of Xinguan epidemic in the world, China was the first country in the world to resume production. In addition, the data from Kantar worldpanel in China showed that the sales of carbonated drinks in China had not been greatly affected during the epidemic period, and maintained a relatively stable growth in the second quarter. Coca Colas third quarter report also showed that the downward trend of single box sales in the Asia Pacific market continued to improve, from 18% in the previous quarter to 4%.
Coca Cola not only promotes the all category strategy in the Chinese market, but also increases its investment in the local supply chain and personnel training in China.
In April this year, Coca Cola officially set up a dairy market in China. It has been approved to establish a new joint venture with Mengniu Dairy to produce and sell low-temperature milk products in China. In the future, the investors and investors will complement each other in dairy product R & D, dairy processing technology, brand influence and distribution channels to develop new brands.
In terms of supply chain, COFCO Coca Cola launched the worlds fastest fully automated pop-up beverage production line in Sichuan in May this year. The production line can produce 120000 cans of pop-up drinks per hour, with an annual output of 260000 tons and an output value of 1.3 billion yuan.
In the third quarter, Coca Cola continued to increase its weight in China.
In July, the new production line of Hubei Swire Coca Cola has completed the bidding, and is expected to be put into production by the end of April next year.
In July, COFCO Coca Cola started construction of its first plant in Guizhou, with an estimated total investment of 270 million yuan in the first phase, which is planned to be completed and put into operation by the end of 2021.
In September, COFCO Coca Cola and Costa Costa Costa reached strategic cooperation on coffee quick selection business, looking for new growth points in the coffee market.
The third largest position
As we all know, Mr. Buffett loves Coca Cola most in his life. Up to now, he has held Coca Cola for 32 years.
According to overseas media reports, the cost price of Mr. Buffetts holding Coca Cola is about $3.25. According to the current price of $51, Coca Cola brings him more than 1500% return on capital.
Source: China Fund News Editor in charge: Yang Bin_ NF4368