Coca-Cola bubbles higher
Strong revenue growth was driven by higher prices and rise in volumes.
Fourth-quarter sales increased by 5% to $11.04 billion, supported by higher prices and a 3% rise in volume, the company announced Tuesday. Profit fell 71% to $1.66 billion from $5.77 billion, mostly due to a one-time gain associated with the acquisition of bottling operations in 2010. However, excluding special items, profit rose 10% to 79 cents per share from 72 cents a year earlier.
Coca-Cola currently competes PepsiCo (PEP), Dr. Pepper Snapple Group (DPS) and other domestic players.
We estimate a $75 price for Coca-Cola, which is about 10% higher than the market price. We are in the process of revising our estimates to incorporate fourth-quarter earnings.
The company's namesake brand, Coca-Cola, saw a 3% increase in volume in the fourth quarter from a year earlier. Volume was driven by a 33% rise in Thailand, 15% in India, 13% in China, 12% in Argentina, 9% in Germany and 8% in Russia, 4% in both Mexico and France, and 3% in Japan. The volume growth corroborates the brand's stranglehold in the international carbonated soft-drink market.
What is particularly encouraging to see is that the brand managed a 1% volume increase in the North American region, a market which is declining in size.
Still beverages show strength
The North American still beverage volume grew by 3% in the quarter whereas international still beverage volume jumped 7%. Minute Maid continued its impressive growth as volume surged 20% in 2011, helped partly by its launch in the African countries of Tanzania, Kenya and Uganda last year. As per our estimates, Minute Maid has a 14% market share in the international juice market, and we expect the figure to continue to rise, albeit gradually, in the coming years.
Energy drink volume rose 19% primarily due to broader distribution of the Burn energy brand. Similarly, water volume grew 7%. The company also unveiled its cost-cutting program to reduce $650 million in expenses by 2015. The money saved can be used to spend on more fruitful areas, such as advertising as in the beverage industry. There is often a strong correlation between advertising budget and sales.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.