The Coca-Cola's CEO Discusses Q1 2012 Results - Earnings Call Transcript

The Coca-Cola (KO)

Q1 2012 Earnings Call

April 17, 2012 9:30 am ET

Executives

Jackson Kelly - Vice President

Muhtar Kent - Chairman, Chief Executive Officer, President and Chairman of Executive Committee

Gary P. Fayard - Chief Financial Officer and Executive Vice President

Analysts

Bryan D. Spillane - BofA Merrill Lynch, Research Division

Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division

Judy E. Hong - Goldman Sachs Group Inc., Research Division

Bonnie Herzog - Wells Fargo Securities, LLC, Research Division

John A. Faucher - JP Morgan Chase & Co, Research Division

William Schmitz - Deutsche Bank AG, Research Division

Presentation

Operator

At this time, I would like to welcome everyone to The Coca-Cola Company's First Quarter 2012 Earnings Results Conference Call. Today's call is being recorded. If you have any objections, you may disconnect at this time. [Operator Instructions] I would like to remind everyone that the purpose of this conference is to speak 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 now like to introduce Mr. Jackson Kelly, Vice President and Investor Relations Officer. Mr. Kelly, you may begin.

Jackson Kelly

Good morning, and thank you for being with us 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 www.thecoca-colacompany.com, under the Reports & Financial Information tab in the Investors section, which reconciles certain non-GAAP financial measures that may be referred to by our senior executives in our discussion 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'll turn the call over to Muhtar.

Muhtar Kent

Thank you, Jackson, and good morning, everyone. Let me begin by saying that I'm pleased with our first quarter results. I've never been more excited about the prospects for our brands, as well as our system, or more proud of our people who are driving our consistent and quality performance results. We continue to deliver volume, value and profit growth as we enter the third year of our 2020 Vision, and we once again saw positive volume growth across every one of our 5 geographic operating groups. We also continue to gain volume and value share globally in the nonalcoholic ready-to-drink beverages and in every sparkling and still beverage category in which we compete. We are winning with our global sparkling beverage portfolio, which was up a solid 4% this past quarter, led by the global growth of brand Coca-Cola, which was up also a healthy 4%. And we are continuing to win with our global still beverage portfolio, which grew a strong 9% this quarter. As we stand a little less than a quarter of the way into our journey towards our 2020 Vision, today's results demonstrate yet again how we are passionately and effectively refreshing a thirsty world with a capable, resilient and advantaged global bottling system.

Before reviewing our quarterly operating results, let's take a few moments to address today's mixed global economic environment. With respect to Europe, we are observing ongoing macroeconomic uncertainty as 2012 unfolds. Austerity measures implemented across the region are weighing on consumer confidence, which recently reached its lowest level since the first quarter of 2009. Despite the challenges in Europe, we are executing on all fronts to drive performance and share gains. So while we expect the macroeconomic conditions will remain difficult in Europe throughout 2012, we remain cautiously encouraged by our performance in this market.

Turning to the United States. Despite its struggle with a sustained period of relative high unemployment, we're pleased to see some early signs of a slowly improving macroeconomic environment. We remain firmly committed to building strong brands and creating value in the United States to capture more than our fair share of the industry's profitable growth.

Finally, let me touch on recent macroeconomic developments across a couple of key BRIC markets. In China, we've all seen economists lower their 2012 GDP growth rate forecast. While we agree that there has been some moderate slowdown in China, we also believe that this is a national progression and that it is a positive for the long-term sustainable growth of the country. As we move through 2012, we anticipate that our business in China may not be immune to this cooling economy, and therefore, we may also see our volume results in China moderate to some extent. Having said that, we are confident that China will continue to serve as a double-digit growth market for our business over the long term. As for Brazil, which underwent a cooling-down period of its own in 2011, there are now signs of improving consumer sentiment. We expect this trend to hold as we move through the balance of 2012 with our business in Brazil continuing to gain market share.

In summary, we always find ourselves operating in a fast-evolving global environment, one with some economies slowing, other economies stabilizing while sustaining high unemployment and still others improving and well on their way to recovery. In all cases, we remain intently focused on realizing our 2020 Vision, and we will keep investing through these challenging times to drive long-term advantaged and sustainable growth. So if we have learned anything these past few years, it is that during times of ongoing uncertainty, consumers are even thirstier for brands that inspire real moments of optimism and happiness.

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