Coca Cola 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Deteriorating economic environments

“In many of our key emerging markets we see deteriorating economic environments coupled with continued softness in consumer spending in the U.S. and particularly in Japan and Europe. This is placing strong pressure on the short term performance of our business. These factors have driven a deceleration in personal consumption expenditures and as a result the non-alcoholic beverage industry is growing one to two points slower than our initial forecast at the beginning of the year.”

We have to change faster

“we’ve taken a hard look at our progress to date. Our strategies and our actions and realize that while the five strategic priorities we laid out at the beginning of the year are on the right track we recognize that we must do more. Above all, the slope and pace of our actions must change to improve our ability to capture non-alcoholic beverage industry growth.”

cutting costs

“we will drive efficiency through aggressively expanding our productivity program. We plan to expand the program from 1 billion in savings by 2016 to 2 billion in annualized savings by 2017 and 3 billion by 2019.”

refranchising

“third action is to refocus on our core business model of building the world’s greatest beverage brands and leading an unmatched global system of strong local bottling partners. In North America, we have a clear and definitive plan to refranchise the majority of our company owned bottling territories by the end of 2017, so at that time we will retain approximately one third of the total bottling distributed volume in North America. ”

Still generating a lot of cash

“We generated $8 billion in cash from operations year-to-date and returned $1.9 billion to share on us through net share repurchases.”

A 7 point currency impact??

“After considering our hedge positions, current spot rates, and cycling of our prior-year rates, we now expect a seven-point currency headwind on operating income during the fourth quarter of 2014, with a six-point impact on operating income for the full year 2014′

We’re in a challenged disposable income environment

“firstly it’s fair to say that we are in a challenged disposable income growth environment, that’s no question. The consumer is challenged everywhere around the world. Its not related to Western developed markets of Europe and Japan, United States and Canada, but it’s also related to emerging markets. There’s a lot of volatility in the world when you look at in the currencies, when you look at interest rates, when you look at the growth rates and when you actually factor in all the different geopolitical issues around the world. There just is a lot of apprehension.”

Coca Cola 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Various misperceptions about health of diet coke which lead to volume declines in US

“Sparkling beverage volume fell 2%, largely due to softer diet coke volume. We have implemented a multi-faceted approach to address category headwinds and the various misperceptions that fuel them. This effort is targeting both obesity and ingredient concerns and increase aggressive sweetener innovation, transparent consumer communications, continued packaging evolution and new partnerships with credible third parties around the world who will use meaningful facts to defend and protect the sparkling category.”

A transformative partnership with Green Mountain

“our recently announced global partnership with Green Mountain Coffee Roasters. This partnership is a real game changing innovation in the non-alcoholic beverage category. Consumers are demanding more beverage variety, functionality and convenience. And we believe Green Mountain is the perfect strategic partner to collaborate with and to capitalize on the many transformative opportunities we see available in the marketplace. Importantly for the Coca-Cola Company with this exciting partnership we’re leveraging new technology to create a transformative platform for consumers to enjoy our great brands through new consumption occasions and new channels.”

“The Coca-Cola Company and System is an incredible integration of power of partnerships in every respect and therefore this is yet another one. ”

Blaming a continued weak economic environment and obesity issues

“there is no doubt that the lingering effects of the global recession in 2009 have created a challenging environment over the last two years. In addition obesity and ingredient concerns have raised some questions about growth in developed markets.”

We are going to achieve our 2020 vision

“Our long term outlook is our performance algorithm which we have and will deliver going forward and 2014 will be a year of steady improvement as we get back up to speed. But make no mistake, our leadership team is confident, accountable, our system will market well, we will sell well and we are going to achieve our 2020 vision.”

Simply the best

“in terms of our flagship market in the United States, clearly the best right now as far as we can see, the best western developed economy in the world we think we will see slightly improved mobility in the United States in 2014 versus 2013. And we hope that will also mean a little bit of increased spending for consumer products as we go into 2014.”

Emerging markets figuring things out

“when the first news on discontinuation of [QE] came out last year around May or June; there was a bit of a shock in emerging markets. We see that over the last seven or eight months these emerging markets are sort of finding ways to deal with it, by no means it’s certain, by no means it’s perfect. But it certainly feels a little bit more under control compared to when it first came up and the interest rate and things like that have been baked into those expectations.”

Gotta invest in the brands in North America

“Yes, I think the key to the North America growth algorithm is investing in our brands and our feet on the street and a key element to that is getting our pricing, so that we can have the revenue to be able to reinvest in sustainable growth. Where we had issues over the years in my experience in North America is when we did not get the price we needed, when our marketing execution was not what it needed to be and therefore the feet on the street started to get reduced and ultimately it hurt sustainable growth.”

Harsh and direct words from an analyst

“So I guess the frustration I am hearing from many investors and a lot of questions on this call, is that there is a feeling that the Company isn’t doing enough to change itself despite that the world around it has really changed and many like us we secularly, to sort of continued emphasis on the Coca-Cola way in history which is respectable in volumes, market shares, and even more marketing blaming short-term externalities but it’s been a little while now that we’ve seen tougher volumes, North America will profit continue to shrink, there is only $1 billion cost savings when some competitors are doing more from a pro rata basis. There is limited movement on refranchising and help innovation so far. So I guess might the company ever believe that it needs to focus on new levers of shareholder value creation like pricing up even more lower promotions, massive cost cutting, big portfolio innovation change and indeed returning more cash to shareholders. So, I know there’s lots there but should investors expect bigger bolder change that pay out to meet this truly different world and so what specifically should we be looking for to just kind of sharing your confidence about the story or should we just expect kind of same status quo going forward?”

Coca Cola 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we were faced with unusually widespread wet and cold weather conditions across the multiple regions, including North America and across Northern Europe and India all of which impacted our industry.”

” Latin America, we grew volume 2% in the quarter and 3% year to date. Volume growth was a little software in the quarter due to macroeconomic challenges in the few major markets, specific increase in consumer debt levels and higher food inflations along with concern over transportation fees contributed to some civil unrest and faster consumer spending in Brazil. In Mexico, weaker job creation and higher inflation impacted disposable income resulting in reduced retail sales.”

“turning to Coca-Cola International starting with Europe. The weak economy continues to be a key factor affecting our performance in Europe especially in the southern regions where unemployment remains high while consumer confidence and expenditures remain low.”

“As is well publicized, China’s economy has been slowed as this is now being soft consumer spending. China’s first half retail sales was the slowest in 10 years while much of the growth in the non-alcoholic ready to drink beverage industry in the second quarter came from the value oriented water category.”

“we saw things in Brazil that we hadn’t seen before, the economy slowed, there were social unrest. It didn’t last very long, things are slowly getting back to normal and we expect a better performance sequentially as we progress through the year in Brazil and in Mexico.”

“It’s customary sometimes that when in the kind of businesses that we are in, when you have a blip in your volume because of a confluence of events some of which are — was not in your control. The first thing you do go our and cut marketing, and I think if you look at our numbers, we have continued to invest aggressively in our brand through the second quarter, through the first — in the first half and as you know every investment and marketing does not pay back in that quarter, it pays back in future quarters.”

“It’s customary sometimes that when in the kind of businesses that we are in, when you have a blip in your volume because of a confluence of events some of which are — was not in your control. The first thing you do go our and cut marketing, and I think if you look at our numbers, we have continued to invest aggressively in our brand through the second quarter, through the first — in the first half and as you know every investment and marketing does not pay back in that quarter, it pays back in future quarters.”

“we always believe here in the Coca-Cola Company, the best ideas are outside.”

“our business, we have said many times, is about brand…I think that is what this business is all about, adding value through brands to our system and I’m confident that you will see us add many more billion dollar brands to our roster in the near future.”

Coca Cola 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“in the first quarter of 2013, we grew worldwide volume by 4%”

“In the coming months, we will be collaborating with five of our bottling partners to implement a plan which will include the granting of exclusive territory rights and the sale of distribution assets with cold drink equipment.”

“Before moving on, I want to revisit a complex societal issue that touches us all, obesity. Beginning last year, The Coca-Cola Company took new steps to give consumers even more choices in packet sizes, sweeteners and beverages, including more low and no calories production while also providing clear nutritional information and by supporting fitness programs. Coca-Cola has a rich heritage of being associated with exercise, sports and active lifestyle.

Today we are using our marketing expertise and community connections to inform consumers about energy balance and to inspire more people to get moving. We firmly believe the challenges of obesity are solvable.”

“As for currencies, we remain fully hedged on the Euro, Yen and Sterling for 2013 and into 2014”

“I have said many times that if commodities go down, don’t look for us to reinvest that in price. We have worked very hard to earn the price that we take in the marketplace. We don’t have an affordability problem in the United States with our sparkling beverages. We would love to continue to invest behind our brands.”

“part of what we are doing with this new bottler arrangement focuses on that up and down the street where bottlers and CCR add the most value which is not only big customer sales, but up and down the street execution”