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Coke Blows Up Guidance, Is Latest Consumer Bellwether And Buffett Favorite To Disappoint, Stock Stumbles
Yesterday it was IBM, today it is the turn of that other Buffett favorite and consumer-spending bellwether, Coke, to disappoint and push the stock lower, when not only did KO miss on the top line, reporting $11.98 billion in sales, below the Estimate $12.12 billion, but utter some unpleasant words about the future, guiding "below its long-term EPS growth target for 2014." And because nothing says strong consumer like one of the biggest consumer staples blowing, we will merely wait for MCDs to come out next and complete the "recovery" picture.
And while elow we present some of the most amusing tidbits from the KO report, nothing beats "structural changes" as in:
- Reported net revenues were even in the quarter and declined 2% year to date. Excluding the impact of structural changes, comparable currency neutral net revenues grew 1% in the quarter and 2% year to date.
- Reported operating income increased 10% in the quarter and 2% year to date. Excluding the impact of structural changes, comparable currency neutral operating income grew 5% in both the quarter and year to date, while the Company continued to invest for growth in its brands with its global system partners.
- After adjusting for structural changes, the Company delivered comparable currency neutral net revenue growth of 1% in the quarter, capturing global price/mix of 1%. On a year-to-date basis, comparable currency neutral net revenues grew 2% after adjusting for structural changes.
Is "strucutral changes" anothera name for "everything that lost us money"?
And yes, FX is becoming a headwind:
- Third quarter reported EPS was $0.48, a decline of 13%, and comparable EPS was $0.53, even with the prior year quarter. Comparable currency neutral EPS increased 6%.
- Reported operating income [for Eurasia and Africa] grew 15% in the quarter, which included a 9 point headwind from foreign currency
- Reported operating income [for Latin America] decreased 9% in the quarter, which included a 6 point headwind from foreign currency
Talk to the Fed, guys. Talk to the Fed.
Moving on to the impact from Russia, which is about to wreak havoc on MCD as well:
- Volume grew 5% in the Eurasia and Africa Group in the quarter leading to volume and value share gains in NARTD beverages.... with the exception of the Russia, Ukraine and Belarus business unit, where volume declined 3%.
Surprisingly, no FX impact in North America but...
Reported net revenues decreased 2% in the quarter, which included a 2 point headwind from structural items related to refranchised territories and changes to our process of buying and selling recyclable materials. Positive price/mix of 1% was offset by a decrease in volume. Reported operating income decreased 5%, which included items impacting comparability, principally net gains/losses related to economic hedges. Comparable currency neutral operating income decreased 1%, primarily driven by increased brand investments and the impact of structural items, partially offset by gross margin expansion.
The bottom line: the "structurally adjusted" "FX-excluding" future is so bright... if only it wasn't for reality:
- We expect the impact of structural items to be a 1 to 2 point headwind on net revenues and an approximate 2 point headwind on operating income during the fourth quarter of 2014.
- We continue to expect fluctuations in currency exchange rates to have an unfavorable impact on our reported results in 2014. Based on current spot rates, our existing hedge positions, and the cycling of our prior year rates, we expect an approximate 7 point headwind on operating income during the fourth quarter of 2014. We now estimate currency will be a 6 point headwind on our full-year operating income, which is at the high end of the outlook we provided last quarter.
- We continue to expect operating leverage to be flat to slightly positive for the full year.
- We are now targeting full-year 2014 net share repurchases of $2.5 billion.
- Given the above, the Company expects to be below its long-term EPS growth target for 2014.
Bottom line: when one excludes reality, everything is great.
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Buffet is on a winning streak.. LOL
its ok everyone, coke and hookers dont count in GDP calculations. Oh, wait...
Diabetes
What we need here is an even more aggressive share buy-back program. I won't be happy until I hold the last outstanding share of the last public company on the planet.
If they made a movie about it....it would probably look something like this.
http://www.youtube.com/watch?v=sd1DVlOl1eY
What they don't tell you is that TPTB changed the formula for coke-a-cola about five years ago. When they rolled out New Coke in the '80's, there was such a public outcry that they decided to roll this formula change out without fanfare. They reduced the sugar content and the citric acid. Coke used to give you an "ahhhhh" when you took a drink, now it just tastes flat. They will blame the loss in sales on everything except the new formula. We now buy Blue Sky Cola. It doesn't taste as good as the original, but it's pretty darn close
Innovation my friend.
There are other things that give you an "ahhhhh" nowadays.
I drink my KO without a Hazmat suit!
signed, "the clipboard guy"
Hmmm, just a wild guess ... the new formula is cheaper to produce. Just another form of packaging inflation that those of us who actually shop and pay with our own money notice. The FSA don't know better or care ... cuz it's all free!
Oh well ... I stopped drinking soft drinks a while back (don't miss them either), cut out the sugar and carbs, smaller portions, more clean, cold water, a little exercise and voila ... I found my 6-pack again (at 50) ...
Another $2.5 billion down the rathole to prop up its share price and ensure those executive stock options retain their value.
Must.Make.It.To.End.Of.Year
It's all my fault. I just can't handle that much sugar any more.
I think only the Mexican Coke uses real sugar anymore....you can get it at Sam's.
Wait till you look at Mickey Ds report.....STINKO
Coca Cola and McDonalds are the symbols of civilisation.
McDonalds is a government subsidized cafeteria for the poor. I suspect they will survive no matter how badly they do.
Yeah just like White Castle...
The only thing I miss living in the South.
Dont forget the toilets!
When you are pissed drunk, cold and wet in the early hours of the morning and have to make a pit stop, you look out for the golden arches of M!
McDonald's is good example of systematic transfer of tax payers contribution to rich's pocket.
McD's last guidance was dismal. The execs admitted the rotten Chinese meat + weak economy + service problems in their new stores are creating 'strong headwinds' ... as they like to call it.
Given that people cannot even afford 'The Dollar Store' anymore, I expect their next guidance to be horrible.
Coca Cola and McDonalds are the symbols of civilizations downfall.
fixed it for ya
When does Coke stop becoming a bellweather? I only drink soda when im stressed
get some self control you mon calamari before you embarrass ZH.
As each blue chip bell weather fucking implodes, I love how the indices keep levitating.
At some point they won't even care that everyone knows it's rigged. It's like zappa's curtains behind the stage.
Bring it.
LOL
They are not rigged, they are just following in the footsteps ...
http://www.goldonomic.com/zimbabwe.htm
http://www.businessinsider.com/heres-what-happened-to-stocks-during-the-german-hyperinflation-2011-11
ibm, coke, mcd, shld (minus financial jujitsu that sparked 25% bump which will deflate) - american icons all taking it up the shitter.
Says everything you need to know about 'murka.
Bullish! Man the sails, the bots are going to take this sucker to the moon!
Futures no like that
But, but the media headlines all say everything is great...
http://olduvai.ca
OT
Ebola Czar Ron Klain Says "Overpopulation" Top Concernhttps://www.youtube.com/watch?feature=player_embedded&v=KRdpi0Ww2-8
that is the scariest shit i have ever seen in my 5 years on ZH
Crank up the Liberian visas....we'll use charter flights if we have too.
Holy crap!
Yep the Ebola czar showing his true leadership on how overpopulation is a problem, particularly in Africa and Asia, i can see him getting to the route cause of the Ebola problem in around 2 years, when the exponential curve of infected and deaths diminishes his concern on this finite planet. Doing gods work indeed......this fucking exceptionalism kills me, we were all born equal, just under a variance of circumstances.
They need an iCoke sold at iMcdonalds ithink.
Why would anyone drink that shit anyway? Especially Diet Coke. Even when I was drinking soda way back when I was a Pepsi guy.
Because I can't smoke cigarettes at my desk any longer.
All these comments and once again I'm the first to vote on the article?
We are Libertarians, we dont vote.
This is actually great news guys! Mayor Bloomberg's efforts to mold us all into his image of sub 30oz soda drinkers is starting to pay off. Bad news for Coke, but great news for humanity.
\s
Our Open EDITDA in our "core" businesses is outstanding!
First there was Freedom Fries. Now it's time for Corpa Cola.
Coke is a crap product. As most folks know! Only the sheeple drink it.
McDonald's revenue Y/Y: -4.6%
drinks that kill you slowly..soda leads the list..do you want water with your corn syrup sir ,or do you want Zero cal sweetener that kills your pancreas? selling poisons is very profitable, buffet should know.
he sells for profit the lowest cost of production items ever: water, sugar or no cal sweetener, or even better insurance paper, for that 1000% mark up..even bond rating co's were he gets to front run the markets.
buffet and munger high profits thru corruption of. gov, remember auto ins is mandated by law, also getting your bonds rated gov and buffet they are here to help .
buffet and munger high profits thru corruption of. gov, remember auto ins is mandated by law, also getting your bonds rated gov and buffet they are here to help .
Huge Obama supporters. They can stuff it.
People are starting to realize that coke keeps raising their prices along with those taxes (some areas) that go along with it. A decision to replace high priced polluted water for a cheaper and healthier alternative.
This is pretty cool, no matter what news comes out, I still make money being long the "market." Looks like the Fed finally discovered the secret to a neverending bull market. Congrats, guys! I'm sure Keynes is smiling at you through the flames of hell.
I'd like to teach the world to sting
in perfect harmony
I'd like to buy the world some coke
and keep it company
They're either gonna have to remove the HFCS for put back the original ingredients.
"And because nothing says strong consumer like one of the biggest consumer staples blowing, we will merely wait for MCDs to come out next and complete the "recovery" picture."
Earnings are irrelevant when he have a global cadre of Central Bankers standing by to jawbone and/or print MOAR.
FUBAR.
Mayor McCheese is not amused.
Coke tastes good; bad for you though. Turns people into lard-asses that then need government handouts. Bigger question is how much longer can this sick nation, dedicated to wild gluttonous consumption, enabled through debt, go on? I have trouble like many others, understanding how come the sheeple haven't abandoned all hope yet? The Fed just keeps creating money and so long as there is enough handed out to allow for coke (both kinds),an I-Phone and potato chips, the masses remain obedient. Seems strange, maybe the other coke does numbs their brains, then this one slows them down too much to get up off the couch? Just sayin..have to wonder...
High fructose corn syrup water, self poisoning.
for some time now, my local Walmart has been selling whole milk ($2.98/gallon), with all of its beneficial minerals, vitamins, and plethora of body-building fats, priteins and other nutrients, for less than Coca Cola (on sale now, $3.50 for a case of 12 12-oz cans) (water, sugar, and a host of unnatural, cancer-causing laboratory-manufactured chemicals).
unbelievable choice, to my way of thinking ....
Wholesome milk ? Yup, if you like your milk made of gmo corn and soybeans along with a helping of bovine growth hormones and a ton of antibiotics...
Milk is only healthy if it is organic and raw.
what is funny is that buffett collects moar govt welfare than the whole country combined. hope he has to sell his railroads and the real estate with them