(Reuters) – Coca-Cola Co on Tuesday forecast a hit to current-quarter results as restaurants, theaters and other venues that represent about half of the company’s revenue remain closed because of the coronavirus pandemic.
However, shares of the company rose about 2% in trading before the bell after the soda maker reported better-than-expected revenue and profit for the first quarter and said it expected conditions to start improving from mid-year.
Coca-Cola provides syrups and concentrates to several fast-food chains, theaters, amusement parks among other venues, most of which have either closed all operations or limited their businesses. Several concerts and sporting events, including the company-sponsored Tokyo 2020 Olympics, have been postponed or canceled.
As a result, volumes fell about 25% globally since the beginning of April, largely stemming from the loss of sales other than at retail stores, the company said. The hit to second-quarter results will be material, it said, though the ultimate impact on this quarter and the rest of the year is unknown at this time. Coca-Cola added it expected comparable revenue to include 4% to 5% hit from a stronger dollar.
The Atlanta-based beverage maker said, however, it saw stockpiling in some markets and a sharp rise in e-commerce sales, as consumers rushed to buy goods in preparation for lockdowns.
The rapid spread of the novel coronavirus, first detected in the Chinese city of Wuhan last December, has claimed the lives of about 170,000 across the globe and has forced restaurants, grocers, sports arenas and entertainment venues to shut doors.
Coca-Cola, which last month said it would miss this year’s original financial goals, said it saw coronavirus-fueled pressure as temporary and expected sequential improvement in the second half of the year.
“We’ve been through challenging times before as a company, and we believe we’re well positioned to manage through and emerge stronger,” Chief Executive Officer James Quincey said.
For the first quarter ended March 27, net revenue fell 1% to $8.6 billion. Analysts were expecting $8.28 billion, according to IBES data from Refinitiv
Excluding one-time items, Coke earned 51 cents per share, beating market consensus estimate of 44 cents.
“Coca-Cola posted a very strong set of results… albeit against the backdrop of warnings of a very weak 2Q … and very little visibility as to how trends develop from here,” Barclays analyst Lauren Lieberman wrote in a note.
Reporting by Nivedita Balu in Bengaluru; Editing by Tomasz Janowski and Arun Koyyur.