Coca-Cola Co. (
Q3 2010 Earnings Conference Call
October 19, 2010 9:30 AM ET
Jackson Kelly – Vice President and Director of Investor Relations
Muhtar Kent – Chairman and Chief Executive Officer
Gary Fayard – Chief Financial Officer
Bill Pecoriello – Consumer Edge Research
Carlos Laboy – Credit Suisse
John Faucher – JPMorgan
Judy Hong – Goldman Sachs
Kaumil Gajrawala – UBS
Christine Farkas – Bank of America
Mark Swartzberg – Stifel Nicolaus
Previous Statements by KO
» The Coca-Cola Company Q2 2010 Earnings Call Transcript
» Coca-Cola Company Q1 2010 Earnings Call Transcript
» The Coca-Cola Company Q4 2009 Earnings Call Transcript
» The Coca-Cola Company Q3 2009 Earnings Call
At this time, I would like to welcome everyone to the Coca-Cola Company’s Third Quarter 2010 Earnings Results Conference Call. Today’s call is being recorded. If you have any objections, you may disconnect at this time. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. (Operator Instructions). Due to the interest in this call, we request the limit of one question per person.
I would like to remind everyone that the purpose of this conference is to talk with investors and therefore questions from the media will not be addressed. Media participants should contact Coca-Cola’s Media Relations Department if they have questions.
I would like to now introduce Jackson Kelly, Vice President and Director of Investor Relations. Mr. Kelly, you may begin.
Good morning, and thank you for being with us again today. I’m joined by Muhtar Kent, our Chairman and Chief Executive Officer, and Gary Fayard, our Chief Financial Officer. Following prepared remarks this morning, we will turn the call over for your questions.
Before we begin, I would like to remind you that this conference call may contain forward-looking statements, including statements concerning long-term earnings objectives and should be considered in conjunction with cautionary statements contained in our earnings release and in the company’s most recent periodic SEC report.
In addition, I would also like to note that we have posted schedules on our company website at
under the reports and financial information tab in the investors section, which reconciles certain non-GAAP financial measures that maybe referred to by our senior executive in our discussions this morning, and from time to time in discussing our financial performance to our results as reported under generally accepted accounting principles. Please look on our website for this information.
Now, I will turn the call over to Muhtar.
Thank you, Jackson, and good morning everyone. First, let me begin by saying that we are very pleased with our third quarter performance. We successfully completed our acquisition of Coca-Cola Enterprises, North America business, and the sale of our Norway Sweden bottling operations to CCE, on plan and in line with our commitments and we close this transaction on the heels of executing a strong quarter.
We continue to build on our momentum, delivering solid volume revenue and profit growth this quarter with our results exceeding all of our long-term targets and generating sustainable value for our shareowners.
This quarter, once again underscores how we are advancing our 2020 vision from a position of strength as we enter a new era of growth for the Coca-Cola Company. Together in close alignment with our global bottling partners, we are executing with excellence around the world. Our strategies, our brands, our marketing, our innovation, our partnerships and our people are defining new growth opportunities today, and shaping our system vision for this decade.
Our brand equity is growing stronger around the world as evidenced by a measurable increase in consumer preference for our brands this quarter as well as more potent global growth for our flagship brand Coca-Cola on a year-to-date basis.
We are now intensely focused on driving a fast and seamless integration in our North America operations, and this evolution of our franchise system is an important milestone in realizing our 2020 vision, strengthening our commitments to best serve our customers and our consumers and facilitating our ability to achieve sustainable and profitable growth in our flagship market.
Turning to our current results, this quarter’s comparable currency neutral operating income growth was 14% ahead of our long-term growth target. We grew our quarterly volume a solid 5% also ahead of our long-term growth target fueled by organic unit case volume growth across both North America and our international operations.
We increase net revenues a healthy 8% on a comparable currency neutral basis in the quarter bringing our year-to-date comparable currency neutral revenues to 5%. This is in line with our long-term growth target. And once again we generated significant cash from our operations with cash flow up 15% year-to-date.
Now, I will share our performance results in more detail across our market starting with our flagship market. North America volume grew 2% this quarter, the second consecutive quarter of positive organic growth. On a year-to-date basis, our North America business is now up 1%. These results are due to the continued successful execution of our well-defined brand pack and price strategy focus on driving profitable growth.
Our sparkling beverages in North America grew volume and value share, both against the total category as well as versus our primary competitor. And to be clear, when we speak about share swing gains versus our primary competitor in North America, we refer to our performance across all channels, not just measured channels, which represents less than 40% of our North America business.
Brand Coca-Cola health measures keep improving as we increased our favorite brand score versus our primary competitor amongst the most critical consumer segments. At the same time, Coca-Cola Zero delivered double-digit volume growth for the 18
consecutive quarter. Band Sprite had the second consecutive quarter of positive growth, and is now positive on a year-to-date basis and Fanta had its strongest quarter of the year growing 4%.