Coca-Cola CEO on Q3 results: supply chain issues are not cataclysmic

Shares of Coca-Cola Co (NYSE: KO) were up 3.0% on Wednesday morning after the beverage giant reported market-beating results for its fiscal third quarter and raised guidance for the future.

Highlights from CEO Quincey’s interview with CNBC’s Sara Eisen

Coca-Cola’s sales and volumes returned to 2019 levels in Q3, which was particularly impressive since many of its segments are yet to recover completely from the pandemic. Summarising her interview with CEO James Quincey, CNBC’s Sara Eisen said:

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They’re back in categories like quick-serve restaurants, especially those that are digitally inclined or have drive-throughs. But Coke is big on cruises and stadiums, but travel, leisure, and hospitality are yet to fully recover.

Coca-Cola had paused spending on advertising last year at the peak of the global pandemic, but has resumed marketing as of the third quarter. Quincy also confirmed that supply chain constraints and labour shortages, while problematic, were not a deal-breaker.

Supply chain situation is tight, obviously. They’re facing it on all fronts, but they are able to navigate it. He said it wasn’t cataclysmic. Same goes for labour costs, higher commodity input costs, higher costs for materials like cans and bottles; Coca-Cola is feeling all of it, but he said it isn’t standing in the way of profitability.

Q3 financial performance

Coca-Cola said its net income printed at $2.47 billion that translates to 57 cents per share. In the same quarter last year, its net income was capped at $1.74 billion or 40 cents per share. Adjusted for one-time items, the U.S. firm earned 65 cents a share.

The Georgia-based multinational generated $10.04 billion in revenue that represents an annualised growth of 16.1%, as per the earnings press release. According to FactSet, experts had forecast 58 cents of adjusted EPS on $9.77 billion in revenue.

Future guidance

For fiscal 2021, Coca-Cola now forecasts up to 17% year-over-year growth in its adjusted per-share earnings. In comparison, analysts are calling for a 15.9% increase instead. The NYSE-listed firm expects its organic revenue to climb by 15% this year.

In the third quarter, Coca-Cola said unit case volume and revenue grew in all geographies. Last week, Morgan Stanley reiterated its “buy” rating on KO with a price target of $65 that represents a close to 20% upside from here.