The Coca-Cola Company (NYSE:KO) Q2 2016 Earnings Conference Call - Final Transcript

Jul 27, 2016 • 09:00 am ET


The Coca-Cola Company (NYSE:KO) Q2 2016 Earnings Conference Call - Final Transcript


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At this time, I would like to welcome everyone to the Coca-Cola Company's Second Quarter 2016 Earnings Results Conference Call. Today's call is being recorded. If you have any objections, please disconnect at this time. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. (Operator Instructions)

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 Tim Leveridge, VP and IRO. Mr. Leveridge, you may begin.

Tim Leveridge

Good morning, and thank you for being with us today. I'm joined by Muhtar Kent, our Chairman and CEO; James Quincey, our President and COO; and Kathy Waller, our CFO.

Before we begin, I'd like to inform you that you can find webcast materials in the Investors section of our company website at that support the prepared remarks by Muhtar, James and Kathy this morning. I'd also like to note that we have posted schedules under the Financial Reports and Information tab in the Investors section of the company website. These schedules reconcile certain non-GAAP financial measures, which may be referred to by our senior executives during this morning's discussion to our results as reported under generally accepted accounting principles. Please look on our website for this information.

(Forward-Looking Cautionary Statements)

Following prepared remarks this morning, we will turn the call over for your questions. (Operator Instructions) Recognizing the number of companies reporting today, we have limited our prepared remarks to provide plenty of time for questions that complete the call at approximately 9:50. Now I'll turn the call over to Muhtar.

Muhtar Kent

Thank you, Tim, and good morning, everyone. Today, I will touch briefly on a few key highlights in the quarter before handing off to James to provide a more detailed review of our operational performance.

During the quarter, we continued our progress towards transforming our company to a higher margin and return business focused on our core value creation model of building strong brands, enhancing customer value and leading our franchise system. Our continued focus on our five strategic initiatives enabled us to deliver another quarter of global value share gains while delivering 3% organic revenue growth in a worsening macroeconomic environment. Importantly, our segmented revenue growth strategies drove 3 points of price/mix in the quarter.

Further, our strong focus on productivity was instrumental in expanding operating profit margins and delivering our profit target. While we are pleased with -- we accelerated our price/mix from 1% last quarter to 3% this quarter, our volume and top line results still fell short of our expectations. This was largely due to a weakening demand in certain large emerging and developing markets, which also impacted our company-owned bottling operations revenue growth.

Within our Bottling Investment segment, positive pricing at our North American bottler was offset by challenges in our China bottling operations, resulting