The Coca-Cola Company (KO)
Q2 2011 Earnings Call Transcript
July 19, 2011 9:30 a.m. ET

Executives

Jackson Kelly – Vice President and Director, Relations Officer
Muhtar Kent – Chairman and Chief Executive Officer
Gary P. Fayard – Chief Financial Officer

Analysts

Carlos Laboy – Credit Suisse
Bill Pecoriello – Consumer Edge Research
John Faucher – JPMorgan Chase
Mark Swartzberg – Stifel Nicolaus
Christine Farkas – Bank of America/Merrill Lynch
Caroline Levy – CLSA
Judy Hong – Goldman Sachs

Presentation

Operator

At this time, I would like to welcome everyone to the Coca-Cola Company’s Second Quarter 2011 Earnings Results Conference Call. Today’s call is being recorded. If you have any objection, you may disconnect at this time. All participants will be in a listen-only mode until the formal question-and-answer portion of the call.

If you would like to ask a question, please press star one on your touchtone phone. To withdraw your question, press star two. If you are on a speaker phone, please pick up your handset before asking your question. Participants will be announced by their name and company. Due to the interest in today’s call, we request the limit of one question per person. I would like to remind everyone that the purpose of this conference is to talk with investors and therefore, questions from the media will not be addressed. Media participants should contact Coca Cola’s Media Relations Department if they have questions.

I would now like to introduce Mr. Jackson Kelly, Vice President and Director, Relations Officer. Mr. Kelly, you may begin.

Jackson Kelly

Thank you and good morning, and thank you for being with us today. I’m joined by Muhtar Kent, our Chairman and Chief Executive Officer; and Gary Fayard, our Chief Financial Officer. Following prepared remarks this morning, we will turn the call over for your questions.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements including statements concerning long-term earnings objectives and should be considered in conjunction with cautionary statements contained in our earnings release and in the company’s most recent periodic SEC reports. In addition, I would also like to note that we have posted schedules on our company website at www.thecocacolacompany.com under the Reports and Financial Information tab in the Investor section which reconciles certain non-GAAP financial measures that may be referred to by our senior executives in our discussions this morning and from time to time in discussing our financial performance to our results as reported under Generally Accepted Accounting Principles. Please look on our website for this information.

Now, I’ll turn the call over to Muhtar.

Muhtar Kent

Thank you, Jackson and good morning everyone. Let me begin by saying that we’re pleased with our strong second quarter results, a quarter in which we delivered performance results ahead of our long-term growth targets making this the fifth consecutive quarter we’ve either met or exceeded our long-term growth targets.

We’re winning in the marketplace, leveraging our strong brands coupled with strong solid execution to gain volume and value share globally in the non-alcoholic, ready-to-drink beverages. We’re winning with our global sparkling beverage portfolio lead by Brand Coca-Cola which grew a solid 4% in the quarter. We are winning with our global still beverage portfolio which was up 7% for the quarter and up 9% year-to-date. And we are achieving these results during a time of mixed economic recovery which is a testament to our strong brands and solid business fundamentals.

Before I review our quarterly operating results in more detail, let me take a moment to share some further thoughts on today’s mixed global economic landscape. The economic recovery is weak here in the United States as well as in Europe, Japan and across most of the developed western world. Many middle class consumers, especially those in developed economies, are still feeling somewhat confused and fragile. At the same time, however, many emerging markets are doing quite well, especially those in Latin America, Eurasia, key countries like India, China and other fast growing regions like sub-Saharan Africa.

With this as a backdrop, our focus is on maintaining a long-term vision of where the world is headed and in turn, where the Coca-Cola Company wants to go. For us, that road map for winning is represented by our 2020 vision. A vision shaped together with our global bottling partners and a vision we are confidence is ushering in a new era of winning as we continue along the path to 2020.

We estimate that by decade’s end, there will be a billion new consumers entering into the middle class. Additionally, massive urbanization will take place over the next 10 years with another 800 million or so consumers moving to cities. These consumers are going to generate an increased demand for ready-to-drink, non-alcoholic beverages which is our business. Yet, with a vision, you also need a conviction and belief followed by investment.

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