Investors were bracing for some bad news from Coca-Cola (KO -0.82%) in its fourth-quarter report. Flaring COVID-19 outbreaks had caused a return to lockdowns in many communities, which is a problem because Coke's rebound path is sensitive to the level of consumer mobility in a given market.

The beverage giant's recovery did take a step backward in late 2020, management said in a conference call with Wall Street analysts. But Coke is optimistic about a return to global growth this year.

Let's look at the key highlights from that presentation.

A glass of soda.

Image source: Getty Images.

It's all about the coronavirus

"There is no doubt the near-term trajectory of our recovery will still be impacted by the presence of [COVID-19] in most markets," CEO James Quincey said.

Coke's volume rebound hit a snag starting in December that management blames squarely on growing coronavirus outbreaks in many parts of the world. Most of the beverage giant's sales come from on-the-go drink purchases, and so it is more sensitive to social distancing than peers like PepsiCo (PEP -0.45%). Its chief rival recently announced strong organic growth for 2020, while Coke's comparable figure was down 6%.

On the bright side, Coke notched rising sales for key brands like its Coke regular and zero-sugar franchises. These wins have management feeling optimistic about a robust rebound once the pandemic is contained. "We'll emerge stronger with more consumers, higher [market] share, stronger system economics, and greater stakeholder impact," Quincey said.

Profit and cash wins

"Operating margin expanded through ongoing disciplined cost management, more than offsetting pressure from the top line," CFO John Murphy said.

Coke outperformed Pepsi in profitability due to aggressive cost cuts and more targeted advertising and marketing spending in 2020. Operating margin ticked up despite the pressure from falling sales, in fact.

KO Operating Margin (TTM) Chart

KO Operating Margin (TTM) data by YCharts. TTM = trailing 12 months.

Free cash flow was another bright spot, rising 3% for the year. That success has management predicting another year of solid cash production ahead.

Stay tuned

"The trajectory of the recovery will be a significant factor, and we expect to be dealing with COVID-19 for the better part of the year, with the first half likely to be more challenging than the second half [of 2021]," Murphy said.

Coke issued an unusually wide range of predicted operating results for the new fiscal year, saying it's not clear how quickly vaccines will begin freeing up consumers to return to normal movement patterns. The fiscal first quarter will be its toughest of the year since COVID-19 impacts didn't grow significant until after that period in 2020.

It's highly likely that the beverage giant will achieve growth as compared to last year's 9% drop. But the scale and timing of that recovery won't be clear until later in the year.

Investors will have to wait until Coca-Cola's second-quarter report in six months for a good reading of the consumer staples giant's prospects for returning to setting new sales records. If the pandemic winds down quickly, that could start happening by early 2022.