Coca-Cola’s global volume has tumbled 25% in April as the coronavirus pandemic gripped large swaths of the world population.
The year began strongly at Coke, with volumes up 3% through February excluding China, where the outbreak had locked down major cities, and the company was on track to reach its financial targets.
The deterioration, however, was rapid. Within a month the Tokyo Olympics, of which Coke is a major sponsor, were off. Theaters and restaurants closed from Europe to America and people sheltered in place.
Almost half of Coke’s sales come from theaters, vending machines, shows, musical and other events. Almost all of the volume decline to-date in April came from sales at such events.
As the virus spread, the behavior of consumers shifted radically. The Atlanta company saw sales spike as people loaded up pantries, though those sales have since leveled off.
Sales of soft drinks, juice, dairy, coffee and tea fell during the quarter, though water and sport drinks rose 2% in the Americas.
“The ultimate impact on the second quarter and full year 2020 is unknown at this time, as it will depend heavily on the duration of social distancing and shelter-in-place mandates, as well as the substance and pace of macroeconomic recovery,” the company said in a prepared statement. “However, the impact to the second quarter will be material.”
Coke remains optimistic about a rebound in the second half of this year, however.
First-quarter net income jumped 65% to $2.8 billion, or 64 cents per share.
Adjusted for one-time items, the company earned 51 cents per share, easily beating Wall Street projections of 44 cents per share, according to FactSet.
Coke’s adjusted revenue of $8.6 billion also edged out analyst projections.
Coke has already disregarded earlier projections for the year, but said it’s financial standing is strong Tuesday. Coke ended 2019 with $8 billion in cash and there was strong demand for a $5 billion debt offering last month.
The company is also tightening standards at facilities, checking the temperatures of workers in China, where plants have reoponed.
Plants have reopened in China, where the company checks the temperatures of workers. It’s ramped up sanitation measures at all facilities, though most office employees continue to work remotely.
Coke’s shares are flat before the opening bell Tuesday.