Coca-Cola Co. (KO) - Get Report posted stronger-than-expected second quarter earnings Tuesday, but saw a steep decline in group revenues as stadiums, restaurants and movie theaters remained closed during the coronavirus pandemic.
Coca-Cola said adjusted earnings for the three months ending in June were pegged at 42 cents per share, down 33.3% from last year and narrowly ahead of the Street consensus forecast of 40 cents per share. Group revenues, Coca-Cola said, fell 28% to $7.2 billion and missed analysts' estimates of a $7.57 billion tally.
Coca-Cola said the revenue declines were "primarily driven by pressure in away-from-home channels, which represent approximately half of the company’s revenues" and include clients such as sports stadiums and restaurants.
Coca-Cola, which pulled its full-year earnings forecast on April 21, said "ongoing uncertainty" continues to cloud near-term profit visibility, but expects currency headwinds of 'high single-digits' to impact operating earnings, owing to the strength of the U.S. dollar.
"I'm proud of the people of the Coca-Cola system as we continue to adjust and accelerate our strategies in this fast-changing landscape," said CEO James Quincey. "We believe the second quarter will prove to be the most challenging of the year; however, we still have work to do as we drive our pursuit of 'Beverages for Life' and meet evolving consumer needs."
Coca-Cola shares were marked 2.6% higher in early trading following the earnings release to change hands at $47.39 each, a move that still leaves the stock some 15% down since from the start of the year.
Quincey said Coca-Cola would start to eliminate under-performing brands and prioritize those "best positioned for consumer reach and share advantage."
"The company will also streamline the innovation pipeline against initiatives that are scalable regionally or globally as well as maintain a disciplined approach to local experimentation in order to further strengthen the company's leader, challenger and explorer framework," the company said.