Covid-19 lockdowns to hurt Coca-Cola’s Q2 sales
Coca-Cola says its expected second quarter results will take a hit as restaurants, theaters and other venues that represent about half of the company’s revenue remain closed because of the coronavirus pandemic.
The Atlanta-based beverage maker said, however, it saw stockpiling in some markets and a sharp rise in e-commerce sales, as consumers rushed to buy goods in preparation for lockdowns.
Responding to analysts, Chief Executive Officer James Quincey said: “It’s certainly not the case that e-commerce is offsetting the losses… E-commerce, even though it’s doubled in sales, for a beverage category, it’s still a very small percentage of the total beverage category.
“We do know that our over 134 years of business, we’ve seen many types of crisis…. We are in a better position today than we were heading into previous periods of challenge.”
Coca-Cola makes syrups and concentrates and through its bottlers distributes them to fast-food chains, theaters, amusement parks and other venues, most of which have either closed all operations or limited their businesses.
Several concerts and sporting events, including the company-sponsored Tokyo 2020 Olympics, have been postponed or canceled.
As a result, volumes fell about 25% globally since the beginning of April, largely stemming from the loss of sales other than at retail stores, the company said.
The hit to second-quarter results will be material, it said, though the ultimate impact on this quarter and the rest of the year is unknown at this time. Coca-Cola added it expected comparable revenue to include 4% to 5% hit from a stronger dollar.
For the first quarter, the soda maker reported better-than-expected revenue and profit, and said it expected conditions to start improving from mid-year.
For the first quarter ended March 27, net revenue fell 1% to $8.6 billion. Analysts were expecting $8.28 billion, according to IBES data from Refinitiv.
Excluding one-time items, Coke earned 51 cents per share, beating market consensus estimate of 44 cents.
UBS analyst Sean King noted that first-quarter results were better than feared, but the company had a tougher road ahead.
Source: Reuters
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