Coke stock jumps on positive results
Coca-Cola (KO) shares rose 1.3% Wednesday as the beverage behemoth reported better-than-expected first-quarter results.
It's the first time in nine quarters that Coke has reported a revenue bump.
Though still in the midst of a turnaround, there were some positive signs. The soft drink giant reported improving sales in some markets -- particularly of its beverages sold in smaller packages -- primarily due to increased and more targeted marketing, CEO Muhtar Kent said in a conference call.
Excluding some items, profit came in at 48 cents a share, which beat analysts' estimates of 42 cents. Even then, net income fell 3.8% to $1.56 billion, or 35 cents a share, from $1.62 billion, or 36 cents, a year earlier, the company said in a statement.
There were some small, surprising signs of growth. Global sparking beverage volume grew 1% including 1% growth in the Coca-Cola brand; 5% growth inn Coke Zero, 4% growth in Sprite and 3% growth in Fanta. At the same time, worldwide beverage volume grew 1%, the company reported.
Net revenue grew 1%. And global unit case volume also was up 1%.
"There is still much work ahead. We are operating in a very challenging environment," Kent said in the conference call. "Therefore, we still remain cautious in our outlook."
But he boasted a bit about how Coke's new marketing program is evolving -- and working. "We are rewiring our marketing organization around consumer clusters to drive speed, efficiency and effectiveness," said Kent. Because of that, overall marketing spend was up double-digits in the quarter, he said.
Global marketing is being carefully refined, he said. As an example, he noted that for the 100th anniversary of the iconic, contour Coke bottle, marketing was brought under one umbrella to reach 140 markets. "This is not simply a global campaign," he said, but a marketing network. "As a result we have significantly been able to reduce costs."
He told analysts that marketing is key. "Marketing is playing an important role in how we are generating enhanced revenue in our business. That's an important takeaway."
In the call, Kent also noted that Coca-Colas remains "on track" to deliver more than $500 million in cost savings this year and $3 billion by 2019.