Coca-Cola CEO Talks Q2 Earnings, Downplays North American Concerns

Coca-Cola CEO Talks Q2 Earnings, Downplays North American Concerns

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by: Jayson Derrick, Benzinga Staff Writer



The Coca-Cola Company KO 0.69% reported Wednesday its second-quarter results in which the top-and-bottom-line beat estimates on international strength, but the North American business saw a 1 percent dip in organic sales.



What Happened

As a whole, Coca-Cola's earnings showed strong top-line growth, a good operating income along with earnings per share growth, Coca-Cola CEO James Quincey told CNBC. Meanwhile, multiple temporary factors in the North American business, including business mixes, rising freight costs, tariff related costs and timing issues more than offset an increase in volume, pricing increases, and market share gains.

"More temporary than structural," Quincey said. "Part of a good overall story for the year-to-date."



Why It's Important

The "'pretty broad based cost increases" seen in the second quarter is still a cost pressure that the company needs to pass through to consumers, the CEO said. Nevertheless, consumers are "not comfortable" with the rising prices but still responding well since the conversation surrounding tariffs is well documented.



What's Next

Passing on the higher cost to consumers was the "right thing" for the business to do for the long-term, Quincey said. However, this also creates the likelihood for "pressure in the system" moving forward and management will focus on offering different packaging options at different price points to different consumers.

Coca-Cola's stock traded around $46 a share at time of publication, up 1.7 percent on the day.


© 2018 Benzinga does not provide investment advice. All rights reserved.


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