By Jennifer Maloney

The pandemic has been worse this winter than Coca-Cola Co. expected, but the beverage giant said it expects consumers to return to normal life in the second half of the year as Covid-19 vaccines roll out across many developed countries.

The company offered an outlook for 2021, saying the first half of the year would be challenging. Starting in December, "we saw more restrictions in place than we anticipated," finance chief John Murphy said in an interview. But "we still think that with vaccine rollout building momentum in the coming weeks, the second half of the year will be very strong."

"We also think there's a pent-up demand on the part of people to get out and about," he added. "There's more light at the end of the tunnel this year."

Coke expects high-single-digit percentage growth in organic revenue, which excludes currency swings and acquisitions or divestitures, in 2021. On that basis, Coke's revenue fell 9% in 2020.

The company reported declines in both profit and revenue in the fourth quarter compared with a year earlier. Depressed sales from restaurants and bars more than offset gains from consumers drinking sodas at home. The company said world-wide volumes fell 3% in the fourth quarter.

Layoffs and other cost-cutting measures have helped the Atlanta giant mitigate those declines and improve its operating profit margins. In December the company said it would cut 2,200 of its 86,000 workers. It has also focused on its core brands, dropping others like Tab, a diet soda popular in the 1970s, and Zico coconut water.

Quarterly net income was $1.46 billion, down from $2.04 billion in the year-ago period. Adjusted earnings per share rose to 47 cents from 44 cents, Coke said, beating the FactSet consensus of 42 cents. Revenue fell 5% to $8.61 billion.

Coke also disclosed for the first time that it faces a potential $12 billion tax liability from a long-running dispute with the Internal Revenue Service. The U.S. Tax Court sided with the IRS last year, ruling that Coke placed too much of its profit in its foreign operations instead of in its higher-taxed domestic parent company. The company, which had total income tax costs in 2020 of $2 billion, said it didn't take the full effect of the ruling into account because it was confident that it would win on appeal. Instead, it took a charge for 4% of the potential $12 billion cost. Coke hasn't yet filed its appeal, and resolution could take months or years.

"We have reviewed exhaustively the judgment from November with our advisers and we are, if anything, more of the view that we have a strong position that we will defend vigorously," Mr. Murphy said.

Write to Jennifer Maloney at jennifer.maloney@wsj.com

(END) Dow Jones Newswires

02-10-21 1039ET