Sep 10th, 2012
THE COCA COLA COMPANY
NYSE: KO
Continuing Coverage: Company growth successfully focused in emerging markets
Investment Rating: Market Outperform
Stock Value
2008
2009
2010
2011
Net Income (in millions of USD)
5,807
6,824
11,809
8,572
Average shares outstanding (in millions)
2,315
2,314
2,308
2,284
Net income per share (in USD)
2.51
2.95
5.12
3.75
Valuation (in millions of dollars)
Free cash flow
NPV
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
5,907
6,453
7,134
7,722
8,354
9,034
9,766
10,552
11,399
321,424
USD 235,727
WACC
Free risk rate
Market prime
Country risk premium
Shareholder’s return
WACC
1.89%
6.01%
0.00%
11.26%
5.98%
Total Liabilities (in millions USD)
Equity (EQT)
Leveraged Beta
Industry Beta
Company Quick View
Location: Atlanta, United States (Principal)
Industry: Beverages
Description: Production, bottling, distribution and commercialization of nonalcoholic beverages
Key Products and Services: Coca-Cola, Diet Coke, Fanta and Sprite
Company Web Site: www.thecoca-colacompany.com
Analysts:
Katia Corbacho Alcocer
f0332629@pucp.pe
Natalia Mejia Ninacondor
f0319461@pucp.pe
David Sáenz Pantoja
f0330819@pucp.pe
Katerine Salinas Cabezas
19952184@pucp.edu.pe
Assessor:
Juan O’brien
jobrien@pucp.edu.pe
48,053
31,921
1.56
0.73
Reporte Financiero Burkenroad Perú – The Coca Cola Company
STOCK PRICE
PERFORMANCE
Figure 1:
5-year Stock Price
Performance
Source: Yahoo Finance
INVESTMENT
SUMMARY
Upon determining the Coca Cola Company’s (hereinafter KO) value, by
using the discounted-cash-flow valuation method, we give KO a Market
Outperform rating with a target price of US$93 (versus average market
price of US$79 for the period between January and June 2012). As a
multinational company, currently is focused in ensuring future growth
especially in emerging markets.
Due to successful performance, KO has been considered as the world's
leading into the industry of non-alcoholic beverage concentrates and
syrups. KO produces more than 230 beverage brands and owes most of
all the world's top five soft drink brands, including Coke, diet Coke,
Fanta, and Sprite.
Up to date Coca-cola continue being a leader in the market of beverages
with 41.9% participation against 28.5% of its nearest competitor (Pepsi).
Talking about branches Coca-cola, is also first with Coke, Diet Coke
with 17% and 9.6% respectively, while Pepsi has a 9.2% of participation.
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
INVESTMENT
THESIS
KO has a defined strategy mainly focused in developing its investments
in emerging markets. In this sense, KO’s future plans are directed to
increase sales in Asia, market that is considered to be one of the main
growth drivers for KO’s future.
Investment in Asia
Malaysia
During 2010 KO started a 5-years life investment of about US$302
millions in Malaysia. Up to June 2011, about a third of the total planned
investment amount was already spent setting-up a bottling plant, while
the remaining amount is supposed to be used in sales, marketing and
production innovation in the following five years.
The Indian Republic
Indian market is considered as one of the ten-top markets for KO’s
abroad investments. Therefore, in June 2012, KO announced an increase
of US$3 billions in the India’s previously committed investment (in
addition to the US$2 billion already announced in November 2011), to
be spent over the next eight years in order to expand its business. It is
expected that sales in India keep growing as occurred in the last year
(about 20% in comparison with 2010 results).
China
In August 2011, KO announced a US$5 billion investment in China
starting in year 2012, and for a period of three years. Such investment
mainly will be focused in the construction of new bottling plants,
expansion of existing facilities, development of new drinks, etc.
Investment in Latin and
Centro America
Brazil
Brazil is the KO’s fourth-largest consumer market in the world.
Therefore, in March 2012, KO announced a planned investment of about
US$ 7.8 billion in Brazil starting 2012 and for the following 4 years.
Such investment is planned to be spent mainly in the development of a
new beverage bottling plant. The Brazilian market became attractive due
to the growth potential in the following years, mainly because Brazil will
host the World Cup and Olympic Games, with expected higher earnings
for KO as one of the main sponsor of both events.
Mexico
As part of KO’s strategy of investment in emerging markets, in march
2012, KO announced its plans to invest more than $1 billion during 2012
as part of a $5 billion, five-year investment plan. In Mexico is located
the Latin America's two largest bottlers of Coca-Cola brand products,
Coca-Cola Femsa SAB and Arca Continental SAB.
VALUATION
In order to determine KO’s target price of US$93 per stock share, we
used the discounted-cash-flow valuation method as described below.
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
Valuation method process
We defined as prior consideration, a 10-year period to forecast operating
free cash flows. In parallel we determined a weighted average cost of
capital (WACC) of 5.98%. The WACC determined includes a cost of
debt of 3.28% and a cost of equity of 11.26%. Other assumptions we
included in this valuation were a 1.89% free risk rate, a market premium
of 6.01%, and an industry Beta of 0.73. As a result, we calculated the
KO’s equity value to be approximately $212 billion. This value divided
by the current outstanding shares left us with a share price of $93.
INDUSTRY
ANALYSIS
Industry Drivers
Water is the main ingredient used in the beverage industry (about 90% of
any product composition). Sugar is another principal ingredient in
production of beverages. In this sense, refined sugar is used in countries
as Mexico, and Europe, while in some countries like United States and
Argentina, Coca-cola is sweeten with corn syrup.
Due to the fact that corn syrup is one of the principal ingredients of KO’s
products, therefore any change or variation in the international price of
sugar (consider a commodity) would affect considerably the costs
structure in the manufacture of its products.
Regulations
According to the California law, known as proposition 65, which
indicate that all products should contain some warnings when the
products are sold, if the products contain any substance that could cause
cancer or birth defects.
There is also a law that determines a tax fee over the selling, marketing
and using of some of the non-refillable beverage containers.
Bargaining Power of
Suppliers
Almost 60% of the production costs of the beverages is represented for
sweeten, bottled and essence. The sugar is a product that is imported and
is bought locally, so the sugar is obtained from mixed sources, and
because sugar is in the stock market its price varies with the international
prices. If the sugar is acquired locally, the suppliers would have a little
bit more bargaining power upon the sell price. In the market there are a
lot of bottling companies, therefore the negotiation power that those
companies could cause is reduced.
Bargaining Power of
Customers
The beverage sector has a wide range of customers (bottlers and large
distribution companies) as well as direct consumers (located in different
socioeconomic levels), that's why the customers have a low level of
negotiation. It is important to mention that KO provides both its
customers as well as direct consumers with a wide variety of options that
covers their needs and life style choices.
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
Availability of Substitutes The carbonate beverages, have several substitutes that in these last years
were shown in the market, among the principal ones we have the fruits
beverages and instant beverages. Despite the market has pushed the food
and beverages with natural content, these are in general more expensive
than the gas beverages.
Competitive Rivalry
The principal competence of KO is Pepsi Co., both companies occupied
almost 71% of the market. Major explanation of the strong rivalry
between Coca and Pepsi, and the difference is basically variety of their
products, as well as the customers’ target each company is focused on.
Source: http://www.beverage-digest.com/pdf/top-10_2012.pdf
COMPANY
DESCRIPTION
History
A hundred and 26 years ago, a 54 year old pharmacist named John Stith
Pemberton, created the famous formula. At the beginning the beverage
was used as a remedy to cure headache and to dissimulate nauseas. Then
Mr. Pemberton’s accountant Frank Robinson named it Coca-cola and he
also was the designer of the logo. Finally Griggs Candler acquired the
company and he was the first president.
In 1895 Candler has built plants in Chicago, Dallas and Los Angeles. In
1894 Joseph A. Biednham was the first to put the beverage in bottles,
four years later Benjamin F. Thomas and Joseph B. Whitehead, secured
the beverage rights for bottled and sell it for 1 dollar.
The company decided to create a distinctive bottle to assure that the
buyers were really acquiring a Coca-cola, then in 1916 began the
manufacture of the famous bottle after a contest proposed for the bottle
companies and the Coca-cola company.
In 1919 the Candler family sold all the company stocks, and in 1928
Coca-cola was introduced to the Olympic games, back then Coca-cola
traveled with the American team to the Amsterdan Olympics.
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
Products
After 70 years of success, the company decided that it was time to
expand to new flavors, so they created Fanta (developed in 1940 and
introduced in 1950); Sprite (1961), TAB (1963) and Fresca (1966). In
the 90s the long association of the company was Strengthened with the
support of the Olympic games, the world cup of football, rugby world
cup, and the national basket association. New beverages were introduced
to the company, including Powerade, Qoo (fruit beverage for children)
and Dasani. The company also expands itself with acquisitions as Limca
in India Barq's beer and Inca Kola in Perú.
Up to date Coca-cola continue being a lider in the market of beverages
with 41.9% participation against 28.5% of its nearest competitor (Pepsi).
Talking about branches Coca-cola, is also first with Coke, Diet Coke
with 17% and 9.6% respectively, while Pepsi has a 9.2% of participation.
Source: http://www.thecoca-colacompany.com/citizenship/portfolio.html
Key latest development
Product And Marketing Agreement between Dunkin' Brands Group
Inc and KO
As per the “Product and Marketing Agreement” signed in April 2012,
from August 2012 going forward, more than 9,000 Dunkin Donuts and
Baskin Robbins (chains owned by Dunkin’ Brands Group Inc) will
eventually start with exclusive commercialization of KO products (such
as soft drinks, as well as juices, energy drinks, etc). Such agreement also
includes both companies’ brands marketing campaigns.
PEER ANALYSIS
The competence in Coca-cola is centralized in the beverage segment, and
this in particular in the non-alcoholic products is quite competitive. The
competence that the company has is regional and worldwide. Among the
principal companies that compete direct and in an indirect way with
Coca-cola we could mention Pepsico, Dr Pepper, Nestle, etc. Among the
products that compete in these companies we have, gas beverages,
waters, flavor waters, juices, nectars, etc. Bellow is table showing the
principal companies with the principal key finance indicators.
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
Pepsico Inc.(PEP)
Source: Yahoo finance
Dr Pepper Snapple
Group Inc.(DPS)
Pepsico Inc. is a company created in early 1890. The company produce,
distribute and sell gas and no gas products, sweet and salad appetizers.
Among its principal products besides Pepsi, we can mention Quaker,
Frito Lay, Gatorade and Tropicana, Pepsi is the principal competence of
Coca-cola.
Dr. Pepper was created in 1880. The company does not have bottling
companies, that's why they generally hired the services of independents
bottling companies that work with Coca-cola and Pepsi. The beverage
was first sold in USA, and then they expand to Europe, Asia, Canada,
Mexico, Australia, New Zeland and South America.
MANAGEMENT
PERFORMANCE
AND BACKGROUND
Directory of Coca-cola_______________________________________
President (CEO)
Sr. Muhtar Kent
Vice President (CFO)
Sr. Gary P. Fayard
Vice President y controller
Sra. Kathy N. Waller
Directors
Sr. Herbert A. Allen
Sr. Alexis M. Herman
Sr. Ronald W. Allen
Sr. Donald R. Keough
Sr. Howard G. Buffet
Sr. Robert A. Kotick
Sra. Maria Elena Lagomasino
Sr. Peter V. Ueberroth
Sr. Donald F. MacHenry
Sr. Jacob Wallenberg
Sr. Sam Nunn
Sr. James B. Williams
Sr. James D. Robinson III
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
General Managers__________________________________________
Harry L. Anderson
Senior vicepresident, global business and
Technologies services.
Ahmet Z. Bozer
President of Asia and Africa
Steven A. Cahillane
President and CEO of Coca-cola
Refreshments, which is the company
bottling and customer services
Allexander B. Cummings Jr. Executive vicepresident and chief
administrative office
J. Allexander M. Douglas Jr. President of the North America group
Ceree Eberly
Senior vicepresident and personal chief
Gary P. Fallard
Executive vicepresident and CFO
Irial Finan
Executive vicepresident and president of
Bottling and logistic
Bernhard Goepelt
Senior vicepresident, general counselor
And legal chief counselor
Glenn G. Jordan
President of the pacific group
Geoffrey J. Kelly
General counselor
Muhtar Kent
President of the general board of directors
and CEO
Dominique Reiniche
President of the Europe group
José Octavio Reyes
President of the Latino América group
Joseph V. Tripodi
Executive vicepresident and marketing
chief
Clyde C. Tuggle
Senior vicepresident and public relations
Jerry S. Wilson
Senior vicepresident and customer chief
Guy Wollaert
Senior vicepresident and technical office
chief
SHAREHOLDER
ANALYSIS
As of December 31, 2011, about 32% of KO’s outstanding shares were
owned by a total of 40 major institutional and mutual fund owners.
Individual investors, minor insurance companies, and minor pension
funds held the remaining 68% of shares. Such distribution is summarized
in the following chart:
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
Source: Yahoo Finance
RISK ANALYSIS
Operational Risks
KO is subject to several internal and external risks, including
operational, regulatory, and financial risks, as discussed below.
Dependence on Bottling Partners
KO’s core business refers to commercialization of carbonated syrup and
concentrates to independent bottlers. Therefore, one of KO’s main goals
is to ensure that relationships between KO and its major customers are
well maintained, by providing them diverse incentives including not only
good prices, but also competitive marketing support. If such incentives
are not appropriately managed, KO business may suffer negative effects;
because these companies’ business include also production of own
beverages as well as distribution of products from other beverage
companies (KO’s competitors). Such dependence on these bottling
partners is one of KO weakness.
Lack of raw, supply and packaging materials risk
Most of KO’s products, as well as its bottling partners’, use various
ingredients, such as sucrose, aspartame, fruit concentrates, etc, as well as
PET for bottles and aluminum for cans. KO’s main risk would be related
to variation of prices for such materials, which depends on market
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
conditions. Such increases may not always be recovered by increasing
prices of finished products, mainly because
Financial Risks
Liquidity risk
Per definition, the current ratio and the quick ratio indicate companies’
liquidity level. In this sense, current ratio evaluates companies’ ability to
pay in a timely manner the integrity of their short-term liabilities; in the
other hand, quick ratio measures the portion of liquid assets that can be
used by companies to pay all their short-term liabilities. As shown in the
chart below, KO’s current ratio for the first 2012 quarter is greater that
the ratio shown by its peer, but pretty similar to the industry average
ratio.
Liquidity Ratios
Company
The Coca Cola Company (KO)
Dr Pepper Snapple Group Inc (DPS)
Pepsico Inc (PEP)
Current
Ratio
1.1x
0.9x
1.0x
Quick Ratio
0.8x
0.6x
0.6x
Source: Bloomberg
Currency fluctuation risk
Due to latest strong fluctuation of the U.S. Dollars (USD), and because
KO is a Company based in United States, the lost and recovery of USD
value directly influences in the determination of its earnings. The reason
why USD fluctuation affects KO’s financial performance mainly refers
to the fact that about 75% of the total KO’s operating income proceeds
from foreign operations. Therefore, as the USD strength increases, it
influences in the weakness of foreign currencies, and also affects
earnings proceeding from good sold in foreign markets, because the
worth of such goods decreases in the same proportion than the USD
becomes stronger.
Financial Instruments exposure risks
In order to cover from previous Currency Fluctuation Risk, KO hedges
most of the exposure to foreign currencies, in order to avoid negative
effects in earning from their fluctuations. In this sense, because of
remain weaknesses of some of the principal financial institutions, as a
result of the previous financial crisis, KO’s future financial instruments
transactions may be affected, mainly due to the uncertainty of such
institutions solvency.
Interest rate risk
One of KO’s financial policies refers to maintain a high level of
financing debt, based on the fact that it would decrease KO’s cost of
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
capital, and therefore positively affect to the shareholder’s equity return.
Due to this, KO is exposed to positive changes of Interest Rates, which is
often covered by financial instruments, however they would not ensure
to KO’s the fully coverage of such interest rate risk. In addition, KO
financial risk management also can be affected by the credit rating
agency’s evaluation, which is expected by KO management to remain
positive as in the latest years.
FINANCIAL
PERFORMANCE
AND
PROJECTIONS
In the process of analyzing KO, we made several assumptions based on
public information about the Company’s future operational, investing,
and financing decisions. These assumptions led us to a target price of
US$93.
Operational Assumptions One of the main assumptions necessary to determine KO’s cash flow is
the estimated growth for annual revenues, which was obtained from
Yahoo Finance, as shown in the following chart:
Source: Yahoo Finance (http://finance.yahoo.com/q/ae?s=KO+Analyst+Estimates)
Such growth estimations are aligned to KO’s current future plan
denominated “2020 Vision”, which main objective is to reach revenues
of US$200 billion by the end of year 2020 for both worldwide KO
companies as well as bottling partners (meaning the double of 2010
revenues).
In order to determine estimated growth rate for cost of goods sold, as
well as for selling, general and administrative expenses, we determined
the average over historical information of the previous 4 years to project
KO’s operating expenses. In this regard, we expect that such growth rate
will remain the same for the next 10 year period.
Investing Assumptions
In order to determine the annual Capex for KO’s cash flow, we identified
the following ratio:
Decem ber 31,
2007
2008
2009
2010
2011
Capital Expenditures (Capex)
1,648
1,968
1,993
2,215
2,920
Property, plant and equipment - net
8,493
8,326
9,561
14,727
14,939
Property, plant and equipment - gross
9,656
9,554
10,797
16,170
16,893
Net Operating Revenues (NOR)
28,857
31,944
30,990
35,119
46,542
17.51
16.23
15.55
15.86
15.94
NOR / Capex
The proportion of Capex over Revenues during last 5 years was stable,
therefore in order to determine annual Capex for the 10 year-period cash
flow (from 2012 to 2021) we used the 2011 result of 15.94.
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
Financial Performance
Profitability
KO's gross profit margin for fiscal year 2011 decreased to 60.9% from
63.9% in 2010, mainly explained for the difference between sales’
increase in 2011 versus 2010 of 32.5%, while cost of goods sold
increased in 44.8%, for same periods. Such difference may be explained
for the acquisition of the CCE North American business, mainly due to
the increase of the purchase cost of supplies such PET, metals, etc.
Liquidity
Liquidity Ratios
2009
Current ratio
Quick ratio
2010
1.28
1.11
2011
1.17
1.02
Average
1.05
0.92
1.17
1.02
According to the liquidity ratios average obtained in the chart above, KO
showed a weaker liquidity position versus 2010, based on the result of its
quick ratio of 0.92 and 1.02, respectively. Such situation may indicate a
potential lack of ability to cover short-term cash needs, but not in the
case of KO because one of its main strength is the ability of generating
cash, and the consistently accomplishment of its financial commitments.
Efficiency
Efficiency Ratios
2009
2010
2011
Average
Current Receivables turnover ratio
Debtors payment period
8.25
43.66
7.93
45.41
9.46
38.06
8.54
42.37
Inventory turnover ratio
Days Inventory Outstanding
4.19
86.02
4.25
84.80
5.26
68.45
79.76
1.48
243.25
1.27
283.49
1.81
199.44
242.06
Current Payables turnover ratio
Creditors payment period
Inventories balance by the end of 2011 amounted to US$3 billion,
showing a stock increase of 16.7% versus 2010. Also, we observed that
in the last 3 years KO showed a decrease of the “days’ inventory
outstanding ratio” from 85 days in 2010 to 68 days in 2011.
Accounts receivable showed a balance in 2011 of US$4.9 billion, which
in comparison to 2010 decreased in 11.1%. Also, we observed that “daily
sales outstanding ratio” in 2011 was 38.06 days in comparison to 45.41
days in 2010, which indicates KO’s ability to collect cash in waiting.
Accounts payable balance as of 2011 amounted to US$9 billion,
increased in 1.1% versus same balance in 2010. In regards to “days
payable outstanding ratio” we observed that it decreased in 2011 versus
2010 (199 and 283 days, respectively), however despite of this it still
indicates that KO’s credit terms with suppliers are still appropriate and
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
allow KO to obtain indirect financing.
Debt
Debt Ratios
2009
Debt to equity ratio
Long Term Debt to Total Asset Ratio
2010
0.92
0.29%
1.33
5.91%
2011
1.51
8.00%
Average
1.25
4.74%
KO shows leverage level of 1.51 in 2011, which has been increasing
during last 3 years. This indicates that KO in the last year has been overleveraged with debt, which is explained in the strategy followed by KO
of obtaining financial capital by using debt financing, instead of issuance
of stock.
On the other hand, the “long term debt to total asset ratio” has increased
in 2011 in comparison with previous years to 8% from 5.91% in 2010
and 0.29% in 2009, which means that KO’s level of long debt had an
important growth during last year.
Also it is important to mention that as part of KO cash flow strategy is
included the continuous review of the level of short-term and long-term
debt, mainly in order to determine whether or not it is necessary the use
of the short-term Commercial Paper program, or the replacement of
short-term debt to long-term financing.
Sensitivity analysis
We performed the analysis by changing some main assumptions, as
follows:
Stock price
According to the analysis performed and in order to get closer to the
current share price as of end of June 2012 (US$78), KO growth rate from
2022 to perpetuity must decrease to 1%, which seems not possible due to
the growing markets where KO is currently involved.
Sales growth
perpetuity
Share price
92.02
13
-0.5%
63.06
0.0%
66.92
1.0%
76.95
1.5%
83.65
2.0%
92.02
2.5%
102.81
Reporte Financiero Burkenroad Perú – The Coca Cola Company
Cost of goods sold
By the end of 2011, the cost of goods sold represents the 36% of total
sales. As per our analysis, such percentage would have to increase up to
37% in order to get closer to the share price as of the end of June 2012.
Such increase is unlikely to occur due to efficient cost control currently
implemented by KO.
Cost of goods Share price
sold
29.0%
92.02
125.79
31.0%
114.42
33.0%
103.05
35.0%
91.69
37.0%
39.0%
80.32
68.95
WACC
As a result of the cash flow prepared for KO (for a 10 years-period), we
obtained a WACC of 5.98%. Therefore only if the WACC increases up
to 6.5% the KO share price would be closer to the current share price up
to the end of June 2012.
WACC
Share price
92.02
127.83
5.0%
107.08
5.5%
6.0%
91.54
6.5%
79.48
7.0%
7.5%
69.85
61.99
Crossed-drivers sensibility analysis
We also performed a crossed analysis of the main drivers in order to
determine how the NPV is affected as shown in the following chart:
NPV
Sales growth perpetuity
233,952
Cost of goods sold
29.0%
31.0%
33.0%
35.0%
37.0%
39.0%
0.0%
234,662
215,116
195,570
176,023
156,477
136,931
0.5%
248,539
227,827
207,115
186,403
165,691
144,979
1.0%
265,201
243,089
220,977
198,865
176,754
154,642
1.5%
285,580
261,756
237,932
214,108
190,285
166,461
2.0%
311,077
285,111
259,145
233,179
207,213
181,247
2.5%
343,896
315,173
286,450
257,727
229,004
200,281
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
As a result of the previous analysis, we determined that in order to
stabilize VPN, and in the case that revenues growth would be 0%, the
cost of goods sold should be reduced to 29% over revenues.
Risk analysis
From the performed analysis we determined that the probability of
obtaining a price stock greater than US$93 is 49.57%. It has been used as
the basis a standard deviation of 38.92.
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Reporte Financiero Burkenroad Perú – The Coca Cola Company
Table 1
Annual Balance Sheets (in millions of US Dollars)
Decem ber 31,
Cash and cash equivalents
Short-term investements
Total Cash, cash equivalents and short-term investments
Marketable securities
2008
4,701
2009
7,021
2010
8,517
2011
12,803
0
2,130
2,682
1,088
4,701
9,151
11,199
13,891
278
62
138
144
Trade accounts receivable, less allow ances of US$83 and US$48,
respectively
Inventories
3,090
3,758
4,430
4,920
2,187
2,354
2,650
3,092
Prepaid expenses and other assets
1,920
2,226
3,162
3,450
12,176
17,551
21,579
25,497
5,316
6,217
6,954
7,233
463
538
631
1,141
Other assets
1,733
1,976
2,121
3,495
Property, plant and equipment - net
8,326
9,561
14,727
14,939
Trademarks w ith indefinite lives
6,059
6,183
6,356
6,430
0
1,953
7,511
7,770
4,029
4,224
11,665
12,219
Total Current Assets
Equity method investments
Other investments, principally bottling companies
Bottler's franchise rights w ith indefinite lives
Goodw ill
Other intangible assets
2,417
468
1,377
1,250
Total Non - Current Assets
28,343
31,120
51,342
54,477
79,974
40,519
48,671
72,921
Accounts payable and accrued expenses
Total Assets
6,205
6,657
8,859
9,009
Loans and notes payable
6,066
6,749
8,100
12,871
2,041
Current maturities of long-term debt
465
51
1,276
Accrued income taxes
252
264
273
362
12,988
13,721
18,508
24,283
Long-term debt
2,781
5,059
14,041
13,656
Other liabilities
3,011
2,965
4,794
5,420
877
1,580
4,261
4,694
6,669
9,604
23,096
23,770
48,053
Total Current Liabilities
Deferred income taxes
Total Non - Current Liabilities
Total Liabilities
19,657
23,325
41,604
Common stock
880
880
880
880
Capital surplus
7,966
8,537
10,057
11,212
Reinvested earnings
38,513
41,537
49,278
53,550
Accumulated other comprehensive income (loss)
-2,674
-757
-1,450
-2,703
-24,213
-25,398
-27,762
-31,304
20,472
24,799
31,003
31,635
390
547
314
286
20,862
25,346
31,317
31,921
40,519
48,671
72,921
79,974
Treasury stock, at cost
Equity attributable to shareow ners of the Coca Cola Company
Equity attributable to noncontrolling interests
Total Equity
Total Liabilities and Equity
16
Reporte Financiero Burkenroad Perú – The Coca Cola Company
Table 2
Annual Income Statements (in millions of US Dollars)
THE COCA COLA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In m illions of USD)
Year Ended Decem ber 31,
Net Operating Revenues
2008
31,944
2009
30,990
2010
35,119
2011
46,542
Cost of goods sold
11,374
11,088
12,693
18,216
Gross Profit
20,570
19,902
22,426
28,326
Selling, general and administrative expenses
11,774
11,358
13,158
17,440
350
313
819
732
8,446
8,231
8,449
10,154
Interest Income
333
249
317
483
Interest Expense
438
355
733
417
Equity income (loss) - net
(874)
781
1,025
690
Other income (loss) - net
39
40
5,185
529
Income before income taxes
7,506
8,946
14,243
11,439
Income taxes
1,632
2,040
2,384
2,805
Consolidated net income
5,874
6,906
11,859
8,634
67
82
50
5,807
6,824
11,809
Other operating charges
Operating Income
Less: Net income attributable to noncontrolling interests
Net income attributable to shareow ners of the Coca Cola Company
17
62
8,572
Reporte Financiero Burkenroad Perú – The Coca Cola Company
Tabla 3
Cash Flow Forecast (in millions of US Dollars)
CASH FLOW FORECAST
2
Net Operating Revenues
Cost of goods sold
Gross Profit
Selling, general and administrative expenses
Other operating charges
EBITDA
Depreciation
EBIT
Taxes
Depreciation
NOPAT
CAPEX
Working capital investment
Perpetuity
FCF
WACC
NPV
LT Liabilities (in millions US$)
Equity value (in millions US$)
Shares outstanding (in millions)
Stock value (in US$)
4
5
6
7
8
9
10
2012
48,496.76
(16,945.00)
31,551.76
(18,172.48)
(762.74)
12,616.54
(1,798.16)
10,818.37
(2,650.50)
1,798.16
9,966.03
(3,042.64)
(1,016.15)
2013
52,715.98
(18,419.22)
34,296.76
(19,753.49)
(829.10)
13,714.17
(2,128.90)
11,585.28
(2,838.39)
2,128.90
10,875.78
(3,307.35)
(1,115.53)
2014
56,706.58
(19,813.55)
36,893.03
(21,248.82)
(891.87)
14,752.34
(2,484.67)
12,267.67
(3,005.58)
2,484.67
11,746.76
(3,557.72)
(1,055.08)
2015
60,999.27
(21,313.44)
39,685.83
(22,857.36)
(959.38)
15,869.09
(2,867.37)
13,001.72
(3,185.42)
2,867.37
12,683.67
(3,827.04)
(1,134.95)
2016
65,616.92
(22,926.87)
42,690.05
(24,587.66)
(1,032.01)
17,070.38
(3,279.05)
13,791.33
(3,378.88)
3,279.05
13,691.50
(4,116.74)
(1,220.87)
2017
70,584.12
(24,662.43)
45,921.68
(26,448.95)
(1,110.13)
18,362.61
(3,721.89)
14,640.72
(3,586.98)
3,721.89
14,775.63
(4,428.38)
(1,313.29)
2018
75,927.33
(26,529.38)
49,397.96
(28,451.13)
(1,194.16)
19,752.66
(4,198.25)
15,554.41
(3,810.83)
4,198.25
15,941.83
(4,763.61)
(1,412.70)
2019
81,675.03
(28,537.65)
53,137.38
(30,604.89)
(1,284.56)
21,247.93
(4,710.67)
16,537.26
(4,051.63)
4,710.67
17,196.30
(5,124.21)
(1,519.65)
2020
87,857.83
(30,697.95)
57,159.88
(32,921.68)
(1,381.80)
22,856.40
(5,261.88)
17,594.52
(4,310.66)
5,261.88
18,545.74
(5,512.12)
(1,634.68)
2021
94,508.67
(33,021.79)
61,486.88
(35,413.85)
(1,486.41)
24,586.63
(5,854.82)
18,731.81
(4,589.29)
5,854.82
19,997.34
(5,929.38)
(1,758.43)
309,114.54
5,907.24
6,452.91
7,133.96
7,721.68
8,353.89
9,033.96
9,765.52
10,552.45
11,398.95
321,424.07
5.98%
235,727
23,770
211,957
2,284
93
18
Reporte Financiero Burkenroad Perú – The Coca Cola Company
Table 4
Balance Sheet Forecast (in million of US Dollars)
THE COCA COLA COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (FORECAST)
(In m illions of USD)
Decem ber 31,
Cash and cash equivalents
Short-term investements
Total Cash, cash equivalents & ST investments
Marketable securities
Trade accounts receivable
Inventories
Prepaid expenses and other assets
Total Current Assets
Equity method investments
Other assets
Property, plant and equipment - net
Trademarks w ith indefinite lives
Bottler's franchise rights w ith indefinite lives
Goodw ill
Other intangible assets
Total Non - Current Assets
Total Assets
Accounts payable and accrued expenses
Loans and notes payable
Current maturities of long-term debt
Accrued income taxes
Total Current Liabilities
Long-term debt
Other liabilities
Deferred income taxes
Total Non - Current Liabilities
Total Liabilities
Common stock
Capital surplus
Reinvested earnings
Accum. other comprehensive income (loss)
Treasury stock, at cost
Equity attributable to shareow ners
Equity attributable to noncontrolling interests
Total Equity
Total Liabilities and Equity
2012
14,753
2013
16,037
2014
17,251
2015
18,557
2016
19,961
2017
21,473
2018
23,098
2019
24,847
2020
26,727
2021
28,751
14,753
16,037
17,251
18,557
19,961
21,473
23,098
24,847
26,727
28,751
5,708
3,754
6,205
4,081
6,675
4,390
7,180
4,722
7,724
5,079
8,308
5,464
8,937
5,877
9,614
6,322
10,341
6,801
11,124
7,316
43,870
6,430
2,331
22,168
6,257
4,309
8,034
1,378
50,907
94,777
20,641
2,041
288
22,970
1,321
4,048
2,853
8,222
31,191
880
11,212
85,116
(2,703)
(31,304)
63,201
384
63,586
94,777
47,191
6,430
2,331
22,243
6,257
4,309
8,034
1,378
50,982
98,172
22,203
24,216
6,430
2,331
16,183
6,257
4,309
8,034
1,378
44,922
69,138
11,394
12,871
2,041
288
26,593
13,656
4,048
2,853
20,557
47,150
880
11,212
43,519
(2,703)
(31,304)
21,604
384
21,988
69,138
26,323
6,430
2,331
17,362
6,257
4,309
8,034
1,378
46,101
72,423
12,385
10,963
2,041
288
25,677
12,103
4,048
2,853
19,003
44,680
880
11,212
49,275
(2,703)
(31,304)
27,360
384
27,744
72,423
28,315
6,430
2,331
18,435
6,257
4,309
8,034
1,378
47,174
75,489
13,322
9,889
2,041
288
25,540
10,549
4,048
2,853
17,450
42,990
880
11,212
54,030
(2,703)
(31,304)
32,115
384
32,499
75,489
30,459
6,430
2,331
19,395
6,257
4,309
8,034
1,378
48,134
78,592
14,331
4,475
2,041
288
21,135
9,011
4,048
2,853
15,912
37,046
880
11,212
63,077
(2,703)
(31,304)
41,162
384
41,546
78,592
19
32,764
6,430
2,331
20,232
6,257
4,309
8,034
1,378
48,971
81,736
15,416
2,041
288
17,744
7,473
4,048
2,853
14,374
32,118
880
11,212
71,148
(2,703)
(31,304)
49,233
384
49,618
81,736
35,245
6,430
2,331
20,939
6,257
4,309
8,034
1,378
49,678
84,922
16,583
2,041
288
18,911
5,935
4,048
2,853
12,836
31,747
880
11,212
74,706
(2,703)
(31,304)
52,791
384
53,175
84,922
37,913
6,430
2,331
21,504
6,257
4,309
8,034
1,378
50,243
88,156
17,838
2,041
288
20,167
4,397
4,048
2,853
11,298
31,464
880
11,212
78,222
(2,703)
(31,304)
56,307
384
56,692
88,156
40,783
6,430
2,331
21,918
6,257
4,309
8,034
1,378
50,657
91,439
19,188
2,041
288
21,517
2,859
4,048
2,853
9,760
31,277
880
11,212
81,693
(2,703)
(31,304)
59,778
384
60,163
91,439
288
22,491
4,048
2,853
6,901
29,392
880
11,212
90,311
(2,703)
(31,304)
68,396
384
68,781
98,172
Reporte Financiero Burkenroad Perú – The Coca Cola Company
Tabla 5
Income Statement Forecast (in million of US Dollars)
THE COCA COLA COMPANY AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT (FORECAST)
(In m illions of USD)
Year Ended Decem ber 31,
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Net Operating Revenues
48,497
52,716
56,707
60,999
65,617
70,584
75,927
81,675
87,858
94,509
Cost of goods sold
18,743
20,548
22,298
24,181
26,206
28,384
30,728
33,248
35,960
38,877
Gross Profit
29,754
32,168
34,408
36,818
39,411
42,200
45,200
48,427
51,898
55,632
Selling, general and administrative expenses
18,172
19,753
21,249
22,857
24,588
26,449
28,451
30,605
32,922
35,414
763
829
892
959
1,032
1,110
1,194
1,285
1,382
1,486
10,818
11,585
12,268
13,002
13,791
14,641
15,554
16,537
17,595
18,732
Interest Income
459
499
537
577
621
668
719
773
832
895
Interest Expense
667
725
780
839
902
971
1,044
1,123
1,208
1,299
Equity income (loss) - net
1,119
1,216
1,308
1,407
1,514
1,628
1,752
1,884
2,027
2,180
Other income (loss) - net
551
599
645
693
746
802
863
928
999
1,074
12,281
13,175
13,978
14,841
15,770
16,769
17,844
19,000
20,244
21,582
Income taxes
3,009
3,228
3,425
3,636
3,864
4,108
4,372
4,655
4,960
5,287
Consolidated net income
9,272
9,947
10,553
11,205
11,906
12,661
13,472
14,345
15,284
16,294
91
99
106
114
123
132
142
153
165
177
9,181
9,848
10,447
11,091
11,783
12,528
13,330
14,192
15,119
16,117
Other operating charges
Operating Income
Income before income taxes
Less: Net income attributable to noncontrolling
interests
Net income attributable to shareow ners of the
Coca Cola Company
20
Reporte Financiero Burkenroad Perú
21