Coca-Cola Co. (KO) Tops Q2 EPS by 1c; Sees Unfavorable Impact in H214 EPS

Coca-Cola Co. (NYSE: KO) reported Q2 EPS of $0.64, $0.01 better than the analyst estimate of $0.63. Revenue for the quarter came in at $12.57 billion versus the consensus estimate of $12.82 billion.

Highlights:

-- Global unit case volume grew 3% in the quarter and 2% year to date. Coca-Cola International volume grew 3% in the quarter while North America volume was even.
-- Sparkling volume and brand Coca-Cola volume accelerated in North America, Eurasia and Africa, Europe and Asia Pacific in the quarter.
-- Global price/mix increased 2% in both the quarter and year to date.

2014 Outlook

At the beginning of the year, we communicated that we expected the bottling transactions completed in 2013 to have an unfavorable 1% structural impact on both our full-year 2014 net revenues and operating income, with the impact in the first half of the year. We now expect the impact of structural items, including the new provision in Venezuela, to be a 1 to 2 point headwind on net revenues and an approximate 3 point headwind on operating income during the second half of the year. The refranchised territories in North America that closed during the second quarter are not expected to have a meaningful impact over the balance of the year.

Currency exchange rates are expected to have an unfavorable impact on our reported results in 2014. Based on current spot rates, our existing hedge positions, and the cycling of our prior year rates, we expect an approximate 3 point headwind on operating income during the second half of 2014, with a relatively similar impact on both the third and fourth quarters. We now estimate currency will be a 5 to 6 point headwind on our full-year operating income, which is an improvement compared to our prior outlook primarily due to the decrease in bolivar-denominated revenues and operating income.

After considering all of the factors above, for the second half of the year we expect the unfavorable impact of structural items to be partially offset by the reduction in our underlying effective tax rate, resulting in a net unfavorable impact of 2 cents to comparable EPS.

In 2014, we are targeting net share repurchases of $2.5 to $3.0 billion.

For earnings history and earnings-related data on Coca-Cola Co. (KO) click here.

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