Coca-Cola Co on Wednesday forecast a return to organic revenue growth this year after a pandemic-hammered 2020 and beat Wall Street estimates for quarterly profit on aggressive cost cutting, sending its shares up 2% in early trading.
The health crisis has accelerated the soda maker’s efforts to trim hundreds of its underperforming brands and shift toward popular products such as sparkling waters and zero-sugar sodas, while also influencing a major restructuring that included thousands of job cuts.
“The progress we made in 2020, including the actions taken to accelerate the transformation of our company, gives us confidence in returning to growth in the year ahead,” Chief Executive Officer James Quincey said in a statement.
For 2021, the company expects adjusted earnings to grow in the high-single digits to low-double digits and organic revenue to rise in the high-single digits.
Organic revenue declined 9% last year, as pandemic-related curbs closed the doors of non-retail channels such as restaurants, cinemas and sporting events that account for over a third of the company’s sales.
Meanwhile, the company warned it expects a liability of about $12 billion related to a dispute with the U.S. Internal Revenue Service (IRS) on how much it charged foreign affiliates for the rights to make and sell Coke products abroad.
The U.S. Tax Court sided with the IRS in November, but Coca-Cola said it “intends to vigorously defend its position” even as the company recorded a tax reserve of $438 million for the year ended Dec. 31.
Net revenue fell 5% to $8.60 billion in the three months ended Dec. 31, just short of expectations of $8.63 billion, according to IBES data from Refinitiv.
On a per share basis, the Atlanta-based company earned 47 cents per share, 5 cents more than estimates.
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