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Why Coca-Cola’s 4Q15 Revenue Could Fall

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Jan. 29 2016, Updated 8:28 a.m. ET

4Q15 results

Beverage giant Coca-Cola (KO) is scheduled to report its results for the fourth quarter of fiscal 2015 on February 9, 2016. The company’s fourth quarter ended on December 31, 2015. Coca-Cola’s revenue missed analysts’ estimate in the third quarter of fiscal 2015 as currency headwinds continued to impact the company, which operates in over 200 countries.

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Currency headwinds

In 3Q15, Coca-Cola’s revenue fell 4.6% to $11.4 billion, missing the consensus Wall Street analysts’ estimate of $11.6 billion. The favorable impact of higher unit volume and increased pricing was offset by an 8% adverse impact of currency headwinds on 3Q15 revenue. In 3Q15, Coca-Cola’s volume growth rose more for still beverages than sparkling beverages.

Coca-Cola’s organic revenue in 3Q15 grew 3%, driven by the favorable impact of price and mix as well as slight growth in concentrate shipments. Coca-Cola constitutes 0.8% of the iShares Russell 3000 ETF (IWV).

PepsiCo’s (PEP) 3Q15 revenue fell 5.2% due to a 12-percentage-point impact of currency headwinds. Dr Pepper Snapple Group (DPS) reported a 3% rise in its 3Q15 sales, driven by higher sales volumes, favorable product and package mix, and price increases. Monster Beverage (MNST) reported a 19% rise in its 3Q15 revenue, driven by strong demand for energy drinks.

Expectations from 4Q15

The consensus Wall Street analyst estimate for Coca-Cola’s 4Q15 revenue is $9.9 billion, which indicates a 9% decline from the comparable quarter of the previous year. In an update from November 2015, Coca-Cola stated that it expects currency headwinds to have a 7 percentage point impact on 4Q15 net revenue. The company had previously estimated a 6 percentage point headwind from currency fluctuations on its 4Q15 revenue.

Overall, analysts expect Coca-Cola’s fiscal 2015 revenue to fall 4% to $44.3 billion, primarily due to the impact of adverse currency movements.

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