Coca-Cola reported a steep drop in second-quarter profits Tuesday due to a big decline in away-from-home consumption, especially during the height of the coronavirus lockdowns.
The results underscored the soda maker’s reliance for sales on sporting events, movie theaters and entertainment – economic segments that have been battered by social distancing protocols instituted to address COVID-19.
Net income came in at $1.8 billion (£1.42 billion), down 32 percent, behind a 28 percent decline in sales to $7.2 billion.
Coca-Cola expects the second quarter to be “the most severely impacted” period of 2020, “the ultimate impact on full year 2020 results is unknown,” the company said.
Chief Executive James Quincey said some away-from-home segments have performed better than others. For example, fast-food restaurants have managed to retain some sales through their drive-through and takeaway businesses.
By contrast, bars, food service restaurants and at-work vendors suffered deep declines because “there was no foot traffic,” Quincey said on a conference call with analysts.
Like many other large companies, Coca-Cola withdrew its annual forecast this spring amid the upheaval of the COVID-19 shutdowns.
The company did not restore a projection in its second-quarter earnings statement, a sign of continued uncertainty as large markets continue to battle outbreaks.
“If we saw the virus starting to be under control, we would imagine we would see sequential improvement through the months and quarters going forward,” Quincey said. “But we cannot discount that there might be further waves of lockdowns, partial or full.”
Quincey said that governments “are getting smarter about how they apply public health measures,” which means “we’re unlikely to see the whole world entering a lockdown at the same point in time.”
Volumes bottomed out in April with a decline of 25 percent, but improved gradually to a drop of 10 percent in June as lockdowns eased, the company said.