How Covid-19 is impacting Coca-Cola
Shares of the Coca-Cola Company (NYSE:KO) are up 4% this week, as investors have reflected on a strong start to 2020 despite a global pandemic.
Excluding asset impairment charges and other items, Coca-Cola reported adjusted first-quarter earnings of $0.51 per share on revenues that dropped 1% to $8.60 billion. This resulted in a net income of $2.78 billion, or $0.64 per share.
The closure of cinemas, restaurants, bars and stadiums due to measures of social distancing is hurting Coca Cola business.
Though about half of Coca-Cola’s revenue comes from home-consumption, this blow cannot be amortized with the stockpiling people are getting while on lockdown. An even more significant impact is expected on its second-quarter results. Post-COVID-19 Era – E-commerce, Cost Cuts, and Sustainability
The company’s e-commerce growth rate did double in many countries, but unfortunately, this still remains a relatively small part of Coca-Cola’s overall business. The company is cutting costs wherever possible, and this includes its generous marketing spending. It has no plans to cut its dividend, but don’t expect any acquisitions this year or stock repurchases.
When we look towards the future of Coca-Cola, we can see a company that is focused on healthier options and sustainable initiatives, such as reducing plastic waste. But the company has survived for over 100 years on the back of its time-tested formula of sugary sodas, and it’s still too early to tell whether these new products can become a long-term driver of growth for the company.
In the meantime, it’s good to see that Coca-Cola was still able to grow its earnings and revenues on a year-over-year basis in the first quarter. COVID-19 or not, Coca-Cola will continue to a dominant consumer staple.
Source: Benzinga.com
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