shares are rising early Tuesday, thanks to a relatively upbeat second-quarter earnings that showed that the impact of the coronavirus pandemic is easing.
Coca-Cola (KO) said it earned 41 cents a share on revenue of $1.78 billion. On an adjusted basis, earnings were 42 cents a share on revenue of $7.2 billion. Analysts were looking for earnings per share of 40 cents on revenue of $7.21 billion.
Unit case volume declined 16% globally. However, that metric did improve throughout the quarter, shrinking from a 25% decline in April to just 10% in June. Operating margins slipped to 27.7% from 29.9%.
Coke said that it lost share in total nonalcoholic ready-to-drink beverages because of the decline in the away-from-home category. That category includes restaurants, bars, sporting events, and movie theaters, all of which were impacted by closures meant to slow the spread of Covid-19. Although the company did see gains in the at-home category, these weren’t enough to make up for the loss of business elsewhere.
Coca-Cola said that it wouldn’t provide guidance, citing the ongoing coronavirus pandemic. However, Coke warned that currency would be a 3% to 4% headwind for revenues in the coming quarter.
All of this was good enough to push the shares higher early Tuesday, with Coke trading up 2.2% to $47.15 at recent check. Revenue was only slightly below consensus estimates, and the two-penny bottom-line beat was welcome, but investors may have been most heartened to hear that global volumes improved sequentially from April. That was a welcome contrast to the company’s prior earnings report, when it warned that volumes were plunging due to Covid-related closures and said investor should brace for more pain.
Moreover, management said that the second quarter “will prove to be the most challenging of the year,” a hopeful sign that Coke sees the picture continuing to improve from here.
Coke has fallen 16.7% year to date through Monday’s close, lagging both the
which has risen 0.7%, and the Dow Jones Industrial
which has declined 6.5%.
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