Coca-Cola reports full-year and Q4 results
Company announces acceleration of refranchising plans
Financial results for the fourth quarter and full-year 2015 were released by Atlanta-based The Coca-Cola Co. Full-year reported net revenue declined 4 percent while organic revenue grew 4 percent. Reported net revenue and organic revenue declined 8 percent and 1 percent, respectively, in the quarter primarily because of the impact of six fewer days in its reporting calendar, the company reports.
For global volume, The Coca-Cola Co. reported that it was up 3 percent for the quarter and 2 percent for the full year.
The company also addressed that it remains committed to the previously announced $3 billion productivity initiative, as well as accelerated refranchising plans. Based on the progress it has achieved to date, The Coca-Cola Co. is accelerating its refranchising plans in North America and is committed to refranchising 100 percent of its company-owned bottling territories in North America by the end of 2017, including all of its cold-fill production facilities, it reported.
The company also announced that in China, it entered into a non-binding letter of intent to refranchise its company-owned bottling operations to existing partners China Foods Limited, part of COFCO Limited, and Swire Beverage Holdings Limited.
Muhtar Kent, chairman and chief executive officer of The Coca-Cola Co., released the following statement: "In late 2014, we laid out a clear five-point plan to reinvigorate growth and increase profitability. In 2015, a transition year, we delivered on this plan despite an increasingly challenging global macroeconomic environment. Our fourth quarter performance was a testament to the action we took as the company continued to deliver solid pricing and unit case volume growth, culminating in 4 percent organic revenue growth for the full year. Importantly, this top-line growth was led by our flagship market of North America, which delivered its strongest annual performance in three years.
"Today, building on our top-line momentum and the success of refranchising efforts to date in North America, we have announced that we are accelerating the pace and scale of our system transformation with plans to refranchise 100 percent of company-owned North American bottling territories by the end of 2017, including all of the cold-fill production facilities,” he continued. “We are also announcing that we have entered into a non-binding letter of intent to refranchise our bottling operations in China to our existing partners China Foods Limited, part of COFCO Limited, and Swire Beverage Holdings Limited, building on other recent global refranchising initiatives in Europe and Africa.
"This acceleration of our global refranchising marks a step change in our efforts to refocus The Coca-Cola Co. on its core business of building strong, valuable brands and leading a system of strong bottling partners,” he continued. “When this transformation is complete, we will look very different than we do today. Expanding Coca-Cola bottlers in various regions will grow in terms of revenue, employment and reach as we transition company-owned operations to the franchise system. The Coca-Cola Co. will return to its focus as a higher margin, higher return and less capital intensive operation. With the accelerated refranchising plans announced today, we will move from a system where about 18 percent of our volume was produced by company-owned bottlers in 2015 to about 3 percent.
"Looking forward to 2016, we remain committed to achieving underlying performance in line with our long-term growth model and delivering long-term, sustainable value to our system and shareowners," he concluded.
For the fourth quarter, The Coca-Cola Co. gained global value and volume share in non-alcohol ready-to-drink (NARTD) beverages.
Global sparkling beverage volume growth in the quarter was driven by 1 percent growth in the Coca-Cola brand, 3 percent growth in Sprite and 7 percent growth in Coca-Cola Zero, partially offset by a 5 percent decline in Diet Coke/Coke Light. It also gained global value and volume share in sparkling beverages in the quarter. Full-year sparkling beverage volume growth was driven by 1 percent growth in the Coca-Cola brand, 3 percent growth in Sprite and 6 percent growth in Coca-Cola Zero, partially offset by a 6 percent decline in Diet Coke/Coke Light.
Global still beverage volume growth in the quarter was driven by 8 percent growth in packaged water, 6 percent growth in ready-to-drink (RTD) tea, 5 percent growth in juice and juice drinks and 2 percent growth in sports drinks. Gains also were reported for the global value and volume share in still beverages in the quarter. Full-year growth was led by growth of 8 percent in packaged water, 4 percent in RTD tea, 3 percent in RTD coffee and 2 percent in sports drinks.
In North America, organic revenue declined in the quarter primarily because of the impact of six fewer days, partially offset by favorable price/mix, the company notes. Acquisitions and divestitures primarily reflect the unfavorable impact of refranchised territories, partially offset by the benefit of its expanded distribution of Monster beverage products in North America, it adds. After adjusting for the six fewer days in the quarter, concentrate sales growth was in line with unit case sales growth. Concentrate sales and unit case sales also were in line for the full year.
Sparkling beverage volume growth in the quarter was driven by growth in Coca-Cola Zero, Sprite and Fanta, partially offset by a decline in Diet Coke. Still beverage volume growth in the quarter was driven by juice and juice drinks, RTD tea and packaged water. It also gained value share in total NARTD beverages for the 23rd consecutive quarter.