By Dave Sebastian
Coca-Cola Co. reported higher sales that beat analysts' estimates, and said it was working with Chinese authorities to reopen factories that faced extended downtime amid the country's health crisis.
Fourth-quarter sales rose 16% from a year earlier to $9.07 billion. Analysts polled by FactSet had expected $8.88 billion.
The beverage giant on Thursday said organic revenue growth, which excludes the effect of currency swings, acquisitions and divestitures, was 7%. Unit case volume increased 3% for the quarter, led by growth in emerging markets.
Chief Executive James Quincey said the company, "under the auspices of the Chinese government," is reopening some manufacturing facilities to distribute its product in a way that wouldn't contribute to the coronavirus outbreak in the country. The plants closed at the start of the Lunar New Year, and the government has asked businesses to remain closed as it extended the Lunar New Year holiday through Feb. 9.
"While our business is closed for the extended holiday, we are able to continue some operations, where needed, with permission from local authorities," a Coke spokesman said in an email.
"It's way too early to tell what the impact in the short term is," Mr. Quincey told analysts, adding that Coke's offices in the country remain closed. China accounts for about 10% of the Atlanta-based company's global sales volume, he said.
Coke shares rose 3.3% Thursday.
Unit case volume, or the number of 24 8-ounce servings of finished beverage sold, of the company's carbonated soft drinks, which include its namesake brands as well as Fanta and Sprite, grew 3% for the quarter, led by growth in China, Brazil and Southeast Asia.
Unit case volume of water, enhanced water and sports drinks were up 2%, while tea and coffee volume grew 4%.
Coke has pushed to roll out new flavors and diversify its offerings in recent years. Late last year it launched a new flavored seltzer brand, Aha, with caffeinated versions. The company was a late entrant to the category that includes market-leading bubbly water LaCroix. In 2018, PepsiCo Inc. l aunched a competitor called Bubly.
Unit case volume was flat in North America despite 3% growth for its water, enhanced water and sports drinks. Volume for Coca-Cola Zero Sugar grew by a double-digit percentage, the company said.
In Europe, the Middle East and Africa, unit case volume rose 4%, driven by growth in Nigeria, North Africa, Turkey and Central and Eastern Europe. But operating income in the marketing region fell due to reduced bottler-inventory levels, Coke said, as European bottlers stocked up last year in advance of Brexit, which is due to take place Friday.
In Coke's Asia Pacific segment, unit case volume grew 2% despite weakness in China, where growth in sparkling-soft-drink sales was offset by the downsizing of certain water and juice products.
For its latest quarter, the company recorded earnings of $2.04 billion, or 47 cents a share, compared with $870 million, or 20 cents a share, a year earlier.
Adjusted earnings were 44 cents a share, meeting analysts' expectations.
For 2020, the company expects organic sales growth of about 5% and adjusted earnings of about $2.25 a share.
The current quarter will include the effect of the operational pause in China and also U.S. sales of Coca-Cola Energy, which became available this month after the company cleared a legal hurdle with Monster Beverage Corp. The beverage is available in about 45 markets, a spokesman said.
RBC Capital Markets analyst Nik Modi said Coke's management has been taking calculated risks and making quick decisions since Mr. Quincey became CEO in 2017, especially in making new products. The company grew sales in categories "no one thought could grow," Mr. Modi told The Wall Street Journal.
But the energy-drink market could be a tough market for Coke, Mr. Modi said. "It could be a nice niche, but I don't think this is going to be a really big part of the Coke franchise."
Mr. Modi said he doesn't expect the coronavirus outbreak to weigh on the company's earnings this quarter.
The outbreak of the severe acute respiratory syndrome, or SARS, nearly two decades ago didn't affect Coke that much "from a business point of view," Mr. Quincey said, adding that China's economy has since grown.
Write to Dave Sebastian at firstname.lastname@example.org