In bad times or good, millions of people will still buy drinks from Coca-Cola (KO). So yet again, the company posted a solid quarter, showing a 55% increase in earnings to $1.54 billion. For the whole year, earnings came to a juicy $6.8 billion, up 18%.
However, there was a drag; that is, the mature markets of the US and Europe. While the economic environment is improving, the performance is still lackluster and it looks like the recovery will be fairly slow.
But of course, Coca-Cola is a global powerhouse and as a result, is finding substantial growth in emerging markets (almost 80% of sales come from outside the US). In terms of unit case volume -- which is a key metric -- there was 8% growth in Brazil and 4% in Mexico. Even France had a 12% growth rate.
And China? The unit growth was a hefty 29%. Oh, and India was also strong, with an increase of 20%.
The momentum should continue for years to come as these countries are still in the early stages of beverage consumption. And while margins may be relatively lower in emerging markets -- because of the price points -- this should be made up by the growth. In other words, Coca-Cola looks well-positioned because of its brand, portfolio breadth and infrastructure investments.
So far in today's trading, Coca-Cola's shares are up 3.72% to $54.61.
Tom Taulli advises on business tax preparation and resolving tax problems. He is also the author of a variety of books, including The Complete M&A Handbook
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