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Coke, Fuze tea demand drive Coca-Cola's quarterly revenue beat

Published 01/30/2020, 08:46 AM
© Reuters. Boxes of Coca-Cola are seen at a grocery store in Los Angeles
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(Reuters) - Coca-Cola Co's (N:KO) quarterly revenue beat market expectations on Thursday, driven by the beverage maker's signature soda, Fuze teas and coffees in North America and emerging markets.

The Atlanta-based company has been pushing to launch more coffee, teas and low-sugar beverages to expand its offer of in-demand products as consumers move away from sugary drinks.

Earlier this month, Coke added dairy company Fairlife to its range of brands, giving Coca-Cola access to fastest-growing categories in the United States ranging from lactose-free to ultra-filtered milk.

The company said fourth-quarter revenue growth was led by its trademark Coca-Cola, that included products such as its caffeinated beverage Plus Coffee and Zero Sugar soda.

Organic revenue, a keenly watched metric that excludes currency fluctuations and acquisitions, climbed 7% during the quarter.

Volumes, a key indicator of demand, grew 3%, spurred by its Coca-Cola soda, with growth across all geographies. Volumes grew 4% for teas and coffee and 3% for sparkling soft drinks.

At the same time, rival PepsiCo (O:PEP) is preparing for the launch of its own coffee-cola beverage that has double the caffeine punch as regular soda.

Coca-Cola's shares were up about 2% in trading before the bell. The stock rose about 17% last year, compared with the broader S&P 500 Consumer Staples index (SPLRCS) and rival PepsiCo (O:PEP) which have each gained about 24%.

Net revenue grew 16% to $9.07 billion, beating analysts' estimate of $8.89 billion.

Coke projected 2020 organic revenues to grow about 5%, compared with the 6% rise it reported in 2019 and said it would continue to expand into new categories through acquisitions in 2020.

"That's a pretty good indication that they feel good about the year so far... this would be seen as setting up a strong year," industry expert and executive editor of Beverage-Digest, Duane Stanford, said.

For the year, Coca-Cola expects to record adjusted profit of $2.25 per share, a cent below analysts' forecast, according to IBES data from Refinitiv.

Excluding one-time items, Coca-Cola earned 44 cents per share in the fourth quarter ended Dec. 31, meeting Wall Street expectations.

© Reuters. Boxes of Coca-Cola are seen at a grocery store in Los Angeles

Net income attributable to the company's shareholders rose to $2.04 billion, or 47 cents per share, in the fourth quarter ended Dec. 31, from $870 million, or 20 cents per share, a year earlier.

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