Coca-Cola withdraws its financial guidance for 2020 amidst the Coronavirus emergency

By:
on Mar 21, 2020
Updated: Apr 14, 2020
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  • Coca-Cola withdraws its financial guidance for 2020 amidst the Coronavirus emergency.
  • Coca-Cola had estimated a 5% organic growth in its revenue in 2020 and a 7% increase in EPS.
  • Coca-Cola is trading around 30% down in the stock market in 2020 so far.

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With
uncertainty rising sharply due to the Coronavirus pandemic, many businesses from
across the globe are withdrawing their previously given financial guidance. In its
statement on Friday, Cola-Cola also warned that it expects to miss its yearly
guidance for 2020 blaming the flu-like virus for massive disruptions in global
business.

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With
the virus spreading fast across borders, many countries have ordered lockdowns
to minimize its transmission. Concerts, sporting events, conferences, and such
major events have been delayed around the world. Restaurants, bars, movie
theaters, cinema, picnic spots have been closed for public with people
restricted to their houses as the authorities continue to struggle to fight
against the virus.

Coca-Cola’s
Previously Given Financial Guidance For 2020

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The
deadly virus has so far infected 277,030 people worldwide and caused over
11,400 deaths. A huge list of businesses have suspended operations across the
globe with many resorting to work from home to support minimum basic
operations. In a regulatory filing, Coca-Cola
said that such measures
of social distancing and the ongoing currency
fluctuations is likely to weigh heavily on its business this year.

In
its previous forecast, Coca-Cola had estimated a 5% organic growth in its
revenue in 2020 while a greater 7% increase was expected in the company’s adjusted
earnings per share to £1.93.

Coca-Cola
said on Friday that the rising uncertainty is making it impossible to predict
the extent to which the health emergency will hit its business. Further update,
as per the company, is expected in the upcoming weeks when the company releases
its earnings report for the first quarter.

Earlier
this year in February, the beverage giant had anticipated that its EPS
(earnings per share) is likely to print 1
to 2 cents down in the first quarter
. Coca-Cola had also forecast a 1-2%
decline in organic revenue and a 2-3% drop in unit case volume in its financial
results for Q1.

Coca-Cola’s
Performance In The Stock Market

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Coca-Cola, however, didn’t highlight an expected disruption in terms of production at this stage.

Coca-Cola dropped a little under 10% in the stock market on Friday from a daily high of around £42.0 per share. The American multinational corporation has lost around 30% in 2020 so far. Its performance in 2019, on the contrary, was fairly upbeat with an annual gain of around 20%. Coca-Cola is currently valued at £141 billion with a price to earnings ratio of 18.52.

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