Coca-Cola Company (The) (KO)

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The Coca-Cola (KO)

Q4 2010 Earnings Call

February 09, 2011 9:30 am ET


Jackson Kelly - Vice President

Muhtar Kent - Chairman, Chief Executive Officer, Chairman of Executive Committee and Chairman of North America Business Integration Team Steering Committee

Gary Fayard - Chief Financial Officer, Executive Vice President and Member of North America Business Integration Team Steering Committee


Judy Hong - Goldman Sachs Group Inc.

Kaumil Gajrawala - UBS Investment Bank

John Faucher - JP Morgan Chase & Co

Mark Swartzberg - Stifel, Nicolaus & Co., Inc.

William Pecoriello - Consumer Edge Research, LLC

Carlos LaBoy - Crédit Suisse AG



At this time, I would like to welcome everyone to the Coca-Cola Company's Fourth Quarter and Full Year 2010 Earnings Results Conference Call. [Operator Instructions] I would now like to introduce Jason (sic) [Jackson] Kelly, Vice President and Director of Investor Relations. Mr. Kelly, you may begin.

Jackson Kelly

Good morning, and thank you for being with us today. I'm joined by Muhtar Kent, our Chairman and Chief Executive Officer; and Gary Fayard, our Chief Financial Officer. Following prepared remarks this morning, we will turn the call over for your questions.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements, including statements concerning long-term earnings objective, and should be considered in conjunction with cautionary statements contained in our earnings release and in the company's most recent periodic SEC report. In addition, I would also like to note that we have posted schedules on our company website at, under the Reports and Financial Information tab in the Investors section, which reconcile certain non-GAAP financial measures that may be referred to by our senior executives in our discussion this morning and from time to time in our discussing our financial performance to our results as reported under Generally Accepted Accounting Principles. Please look on our website for this information.

Now with that, I'll turn the call over to Muhtar.

Muhtar Kent

Thank you, Jackson, and good morning, everyone. I'm pleased to report that once again, the Coca-Cola Company delivered strong results this quarter and ended 2010 having realized another year of solid growth and success.

In 2010, we met or exceeded all of our long-term growth targets. And we achieved these results against a backdrop of an unbalanced global economic recovery and while completing our acquisition of CCE's North America business.

At the same time, we once more gained volume and value share in Global non-alcoholic beverages. We also gained global volume in both the sparkling and still ready-to-drink beverage categories. Together, with our global bottling partners, we are decisively executing our 2020 Vision and are advancing our momentum.

Our brands are stronger and healthier, fueled dynamically by our marketing and innovation. Brand Coca-Cola, the very oxygen of our business, grew 4% for both the quarter and the full year, the highest full year growth our wonderful flagship brand has achieved in over a decade. Our investments are rising as we keenly focused on expanding our profitable operations in a sustainable way across more than 200 markets where we do business today.

Our business in North America is growing again. We delivered positive organic volume growth for the full year in North America. This complements the rapid and successful work we're doing to integrate our North America business, all designed to bring greater growth, profitability and value to our flagship market. And today, our system is more aligned than it has been in a decade. In 2010, the first year of our 2020 Vision, we executed and performed as one closely coordinated global system. No question, the journey to our 2020 Vision is underway.

Turning now to our performance results. I'm happy to report that our volume growth grew a strong 6% in the quarter. Excluding the benefit of our new cross-licensed brands, primarily Dr. Pepper brands in North America, our quarterly volume growth was a strong 5%. This was fueled by organic volume growth in every one of our five geographic operating groups.

As for the full year, we also grew our global volume 5%, again ahead of our long-term growth target and delivered over $1 billion unit cases of incremental organic volume growth. That is more than the equivalent of adding another Japan to our business.

We increased fourth quarter net revenues 45% on a comparable currency neutral basis. For the full year, we grew comparable currency neutral net revenues 14% in line with our long-term growth target, even after excluding the benefit of structural changes, principally due to the CCE transaction and the benefit of new cross-licensed brand.

This quarter, we reported comparable earnings per share of $0.72, up 9% versus the prior year and at the high end of our long-term growth target. On a full year basis, we delivered comparable earnings per share growth of 14%, well ahead of our long-term growth target.

And our fourth quarter comparable currency neutral operating income growth was 10%. This brings our full year comparable currency neutral operating income to 11%, also above our long-term growth target. In fact, this is the fifth consecutive year we have either met or exceeded our long-term profit growth target.

These strong fourth quarter and full year 2010 performance results further strengthened the foundation of our business and provide us with great momentum as we embark on 2011, the second year of our journey to 2020.

Now let's review our performance results across our global markets in more detail beginning with North America, our flagship market. North America volume was up 8% this quarter, with organic volume growth of 3%, excluding the benefit of our new cross-licensed brands. This was North America's third consecutive quarter of positive organic growth. On a full year basis, our North America volume was up 2% and organic volume was up 1%, excluding again the benefit of our new cross-licensed brands.

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