Coca-Cola has recorded a rise in adjusted overall revenue rose for the second quarter.
Leaning On Early COVID-19 Pandemic Lessons To Prepare For Delta Variant Hit
Coca-Cola Co will rely on its COVID-19 pandemic-tested strategy of focusing on bigger brands and doubling down on its supply chain to combat a potential impact from the Delta variant of the coronavirus, its finance chief has said.
CFO John Murphy's comments come as the reopening of global economies helped the beverage giant beat second-quarter expectations and raise its full-year sales forecast, sending the Dow component's shares up as much as 3%.
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Surging infections from Australia to the United States have brought back lockdowns and other restrictions in some regions, raising fears over the pace of the economic recovery and rattling stock markets earlier this week.
Sales in some markets in Asia were hit in the second quarter from the resurgence, Murphy said, adding that some likely impact of the variant is baked into the raised sales forecast.
"When things get more constrained, the bigger brands are the ones you focus on," Murphy told Reuters.
Coca-Cola has streamlined its product range over the past year to ease the fallout from the pandemic. The company, which owns brands such as Sprite, Fanta and Dasani, has discontinued its TaB diet soda and Coca-Cola Energy brands in the United States, and sold its ZICO coconut water brand.
The company is particularly vulnerable to the closing of theatres, restaurants and stadiums, unlike rival PepsiCo that relies more on grocery and retail channels.
"If we have a reclosing of venues or capacity restrictions re-implemented, Coke sales are going to suffer. For that reason we view it as the riskier name to Pepsi," senior equity analyst at CFRA Research Garrett Nelson said.
Coca-Cola's adjusted overall revenue rose 41.1% in the second quarter to $10.13 billion, beating estimates of $9.32 billion, according to IBES data from Refinitv.
The company raised its annual organic revenue target to an increase of 12% to 14%, from the high single digits rise expected earlier. Annual adjusted earnings per share are expected to rise 13% to 15%.
Adjusted earnings of 68 cents per share beat expectations of 56 cents.
No Direct Impact On Sales From Ronaldo Snub
Murphy also said that Coca-Cola Co has not seen any direct sales impact after Portugal soccer player Cristiano Ronaldo removed two bottles of its soda placed in front of him at a Euro 2020 press conference in June.
Ronaldo, a health fanatic with an aversion to carbonated drinks, snubbed the brand by holding a bottle of water and saying "agua", Portuguese and Spanish for water. His action sent the internet into a frenzy and briefly wiped off billions of dollars from the company's market capitalisation.
"You have to take the long view on these partnerships. You're always going to have some events that don't necessarily go your way and we just deal with them and manage them as such," Murphy said in an interview.
"Our commitment to these major tournaments has not been affected," Murphy added.