Coca-Cola had face the wrath of COVID-19 like many of the other players as consumers increasingly stayed at home significantly impacting its beverage consumption. The stock price lagged the benchmark indices with Coca-Cola down about 15% in YTD returns compared to S&P's 1% rise and DJIA's 5% decline. And the company was expected to provide lackluster earnings which it did, but what the future for the one of the world's largest beverage maker entail?

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The company reported a 28% dip in its revenue with organic revenues declining 26% coming below the estimates as the global unit case volume dropped 16% YoY. Most of the decline was attributable to a decrease in concentrate sales while price/mix contributed a 4% decline. The company, however, was able to sustain the operating margins at 30% due to stringent cost-containment measures and limited spending on advertising and promotion. Non-GAAP EPS nosedived 33% to $0.42 beating estimates, albeit marginally by 3%. The company mentioned that it relies heavily on away-from-home channels like hotels and restaurants making up almost half of the total sales and with the lockdown and shelter-in-place restrictions, the volumes were impacted significantly. But the company did note that it feels that the worst is likely over, however, cautioning that the uncertainty remains given the dynamic nature of the virus and hence, the degree of lockdown across different geographies. It also noted that the volumes have improved sequentially from a steep 25% drop in April, worst month in its history, to a 10% drop in June, and is even seeing a low-single-digit drop for the month of July.

The company mentioned that they would be getting rid of the "Zombie brands" which make up only 2% of the company's sales, as they look on pruning down its explorer brands and sharpening its focus on the core brands as well as smaller successful brands. The cuts have already begun with the company closing down the Odwalla brand of juice beverage. Management also noted that although the second wave of lockdown does impact the volumes, the decline has not been as steep as there was during the first wave, partly as governments across the globe now have a sufficient data and tools to tackle the virus. China, Western Europe, and certain parts of South-East Asia are witnessing an improvement in sales and although there is a spike in the US cases, the degree of lockdown is not nearly as same as before.  The beverage company also announced a quarterly dividend of $0.41 per share making the dividend yield of 3.5% and is one of the fewest S&P 500 companies with a history of over 50 years of rising dividends. Considering the current situation, the worst likely seems to be behind the beverage maker and we should see some positive surprises going forward.