After bleak sales in 2020 caused by COVID-19 pandemic, Coca-Cola is putting all its hopes for 2021. Though COVID-19 pandemic’s aftereffect might still linger, aims to return to organic revenue and beat Wall Street estimates. Coca-Cola’s shares also surged after the release of the news.
Coca-Cola and the sacrifices in 2020
According to Reuters, Coca-Cola suffered through a 9% decline in organic revenue last year. Organic revenue sloped along with the closings of non-retail channels. such as restaurants. cinemas and sporting events. For quite some time, such events had contributed over a third of Coca-Cola’s sales.
Aiming to regain its organic revenue growth, Coca-Cola will be cutting costs for its business in 2021. Noted from Reuters, Coca-cola had trimmed a lot of underperforming brands and products. Instead, the company pushed on popular products like sparkling waters and zero-sugar sodas. This alone has caused a major restructuring which further led to thousands of job cuts.
Despite all the sacrifices done in 2020, Coca-Cola is positive that it will thrive through 2021. James Quincey, Coca-Cola’s Chief Exectuvice Officer, said through a statement that “the progress we made in 2020, including the actions taken to accelerate the transformation of our company, gives us confidence in returning to growth in the year ahead.”
Coca-Cola: 2021 forecast
The beverage company is expecting to achieve low-double digits in adjusted earnings. Coca-Cola also aims to leverage its organic revenue to touch high-single digits. Following the release of the news, Coca-Cola noted a 2% surge in its shares in early trading.
However, Coca-Cola will need to spend around $12 billion liability on a dispute with the U.S. Internal Revenue Service (IRS). Previously, Coca-Cola argued over the cost weighed on foreign affiliates in owning the rights to make and sell Coke products abroad.
The dispute didn’t end well, as the US Tax Court backed IRS back in November. Coca-Cola, with $438 million of a tax reserve for 2020 due by December 31 later responded by saying it “intends to vigorously defend its position,” Reuters notes.
Accordingly, Coca-Cola’s net revenue in the three months ended December 31 slumped by 5% to $8.60 billion. The figure slightly missed the expected $8.63, according to IBES data from Refinitiv.
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