Coca-Cola’s (KO) revenues over the last few quarters have been adversely impacted by the refranchising of its bottling territories. Coca-Cola’s reported revenues have declined for the past 13 quarters. Coca-Cola’s second-quarter revenues fell 8.0% to $8.9 billion, primarily due to the 15.0% adverse impact of the refranchising of the company-owned bottling operations. Analysts were expecting revenues of $8.5 billion.
Excluding the impact of structural items, the company’s organic revenues grew 5.0% in the second quarter. This strong organic revenue growth resulted from higher volumes and favorable price and mix. Coca-Cola has been investing in marketing and product innovation to improve its revenue growth.
Analysts expect Coca-Cola’s third-quarter revenues to decline ~10.0% to $8.2 billion due to the impact of refranchising and currency headwinds. The company expects acquisitions, divestitures, and structural items to have a 13.0% negative impact on its third-quarter revenues.
Coca-Cola expects currency headwinds to have a 3.0% impact on its third-quarter revenues. Accounting changes are expected to benefit its third-quarter revenues by 2.0%–3.0%.
Coca-Cola’s rival PepsiCo (PEP) reported 1.5% growth in its third quarter, which ended on September 8. PepsiCo’s organic revenue growth reached 4.9% in the third quarter. PepsiCo’s revenue growth was driven by sales of its Frito-Lay North America segment and the performance of the company’s developing and emerging market business.
Coca-Cola expects its 2018 organic revenues to increase at least 4.0%. Analysts expect the company’s 2018 reported revenues to fall 10.1% to $31.8 billion.
We’ll discuss Coca-Cola’s volumes in the next part of this series.