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Organic Growth Prospects Still Fizzy for Coke

The wide-moat firm reported sales of $31.9 billion, and organic sales for the year grew 5%.


Sonia Vora: Coca-Cola's full-year results largely met our expectations, with sales of $31.9 billion, adjusted operating margin close to 31%, driven by its bottler refranchising, and adjusted earnings per share of $2.08 all near our estimates. We remain confident that the firm will be able to leverage its brand strength and pricing power, which underscore our wide-moat rating, to drive mid-single-digit organic sales growth over our 10-year forecast. Organic sales for the year grew 5% and included a 2% contribution from price/mix, lifted by the firm's continued focus on higher-value packaging formats. We expect contributions from price/mix to average around 2% over our forecast. 

In North America, price/mix strengthened 2% in the fourth quarter, a significant improvement from the flat-to-negative performance in the prior three quarters, which helped offset the cost pressures that have been weighing on firms across the space. However, unit case volumes fell 1%, due to efforts to improve pricing for sparkling soft drinks, downsize juice packaging, and de-emphasize lower-margin tea products. 

Sonia Vora does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.