Second-quarter results for Coca-Cola
Coke after Coke after Coke, ad infinitum
The counter at the bottom of the Coca-Cola corporate homepage says it all. Like McDonald's classic "over five billion served" signage, this counter keeps a running tally of the number of Coca-Cola-brand beverages being consumed around the world each day.
Unlike McDonald's signage, the speed of the flashing numbers on Coke's counter is dizzying, and the company's second-quarter earnings reflect this herculean pace of global consumption and Coke's market-dominating position:
- Total sales are up a staggering 47%, due mainly to Coke acquiring the North American operations of bottling giant Coca-Cola Enterprises at the end of 2010, but also to big growth in China and Russia.
- Volume growth worldwide, a key indicator in this space, is up an Olympian 6% for both the quarter and year to date, thanks to strong volume growth across all five geographic operating groups.
- Gross margins are a head-shaking 61%, an awesome demonstration of Coke's pricing power.
All of this shakes out to an extremely healthy increase in net profit from $1.02 per share to $1.20, beating Wall Street expectations for the quarter.
I'd like to buy the world a Coke...
...but I don't need to, because plenty of people are already doing that for themselves. What they aren't doing is buying Pepsi, at least not at Coke-like levels.
To be fair, second-quarter results for Pepsi's parent company, PepsiCo
This soda tastes flat
Despite these impressive numbers, it's worth noting that, aside from help this quarter from the Coca-Cola Enterprises acquisition, growth abroad is Coca-Cola's sole growth driver. Coke comes in with positive domestic growth (4% by volume) only because of its cross-licensing deal with Dr Pepper Snapple Group
How much more growth is realistically possible for Coke in a mature market like the U.S.? Get used to a flattish, domestic beverage market and for growth abroad to drive business.
Have a Coke and smile, Fools
If you're an investor, there's every reason to. And if you're not, what are you waiting for? There's no sign that Coke's 125-year march to world beverage domination is doing anything but picking up pace.
Spectacular brand power. Emerging market strength, and did I mention that Coca-Cola pays a dividend and that the company just raised it from $0.44 per share to $0.47 ?