The Coca-Cola Company announced today that it will maintain its majority
stake in Coca-Cola Beverages Africa for the foreseeable future.
With the change, Coca-Cola will begin presenting the financial
statements of CCBA within its results from continuing operations in the
second quarter of 2019, in accordance with U.S. accounting standards.
CCBA has been accounted for as a discontinued operation since Coca-Cola
became the controlling shareowner in October 2017.
Coca-Cola previously announced its intention to refranchise CCBA, which
is the largest bottler of Coca-Cola beverages in Africa, serving 12
countries. The company has had discussions with a number of potential
partners.
“Coca-Cola Beverages Africa is a very important part of the Coca-Cola
system, and we see great opportunities to create even more value,” said
Coca-Cola President and Chief Operating Officer Brian Smith. “While we
remain committed to the refranchising process, we believe it’s in the
best interests of all involved for Coca-Cola to continue to hold and
operate CCBA.”
In reclassifying CCBA’s results into continuing operations, Coca-Cola
expects the following:
-
The company will provide reclassified prior year financial information
prior to the second quarter earnings release.
-
Depreciation and amortization for CCBA will be reinstated, per
accounting guidelines. Coca-Cola estimates depreciation and
amortization expense for 2018 of approximately $400 million on a
comparable basis.
-
With the reclassification, Coca-Cola does not expect an impact to its
2019 organic revenue and comparable EPS growth guidance. The company
expects an increase in its 2019 guidance for cash from operations of
approximately $400 million and an increase in capital expenditures of
approximately $400 million.
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CCBA’s results will be reported as part of the Bottling Investments
Group segment.
CCBA was formed in 2016 through the combination of the African
nonalcoholic ready-to-drink bottling interests of SABMiller plc, The
Coca-Cola Company and Gutsche Family Investments. AB InBev later
acquired SABMiller and reached an agreement to transition AB InBev’s
54.5% equity stake in CCBA to Coca-Cola. That 2017 transaction made
Coca-Cola the controlling shareowner of CCBA.
About The Coca-Cola Company
The Coca-Cola Company (NYSE: KO) is a total beverage company, offering
over 500 brands in more than 200 countries and territories. In addition
to the company’s Coca-Cola brands, our portfolio includes some of the
world’s most valuable beverage brands, such as AdeS plant-based
beverages, Ayataka green tea, Costa coffee, Dasani waters, Del Valle
juices and nectars, Fanta, Georgia coffee, Gold Peak teas and coffees,
Honest Tea, innocent smoothies and juices, Minute Maid juices, Powerade
sports drinks, Simply juices, smartwater, Sprite, vitaminwater and ZICO
coconut water. We’re constantly transforming our portfolio, from
reducing sugar in our drinks to bringing innovative new products to
market. We’re also working to reduce our environmental impact by
replenishing water and promoting recycling. With our bottling partners,
we employ more than 700,000 people, helping bring economic opportunity
to local communities worldwide. Learn more at Coca-Cola Journey at www.coca-colacompany.com
and follow us on Twitter,
Instagram,
Facebook
and LinkedIn.
The fairlife® brand is owned by fairlife LLC, our joint venture with
Select Milk Producers Inc. Products from fairlife are distributed by our
company and certain of our bottling partners.
Forward-Looking Statements
This press release may contain statements, estimates or projections that
constitute “forward-looking statements” as defined under U.S. federal
securities laws. Generally, the words “believe,” “expect,” “intend,”
“estimate,” “anticipate,” “project,” “will” and similar expressions
identify forward-looking statements, which generally are not historical
in nature. Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
The Coca-Cola Company’s historical experience and our present
expectations or projections. These risks include, but are not limited
to, obesity and other health-related concerns; failure to address
evolving consumer product and shopping preferences; increased
competition; water scarcity and poor quality; increased demand for food
products and decreased agricultural productivity; product safety and
quality concerns; public debate and concern about perceived negative
health consequences of certain ingredients, such as non-nutritive
sweeteners and biotechnology-derived substances, and of other substances
present in our beverage products or packaging materials; an inability to
be successful in our innovation activities; an inability to protect our
information systems against service interruption, misappropriation of
data or breaches of security; failure to comply with personal data
protection laws; an inability to be successful in our efforts to
digitize the Coca-Cola system; changes in the retail landscape or the
loss of key retail or foodservice customers; an inability to expand
operations in emerging and developing markets; fluctuations in foreign
currency exchange rates; interest rate increases; an inability to
maintain good relationships with our bottling partners; a deterioration
in our bottling partners' financial condition; increases in income tax
rates, changes in income tax laws or unfavorable resolution of tax
matters; increased or new indirect taxes in the United States and
throughout the world; failure to realize the economic benefits from or
an inability to successfully manage the possible negative consequences
of our productivity and reinvestment program; an inability to attract or
retain a highly skilled and diverse workforce; increase in the cost,
disruption of supply or shortage of energy or fuel; increase in the
cost, disruption of supply or shortage of ingredients, other raw
materials, packaging materials, aluminum cans and other containers;
changes in laws and regulations relating to beverage containers and
packaging; significant additional labeling or warning requirements or
limitations on the marketing or sale of our products; unfavorable
general economic conditions in the United States; unfavorable economic
and political conditions in international markets; litigation or legal
proceedings; increased legal and reputational risk associated with
conducting business in markets with high-risk legal compliance
environments; failure by third-party service providers and business
partners to satisfactorily fulfill their commitments and
responsibilities; failure to adequately protect, or disputes relating
to, trademarks, formulae and other intellectual property rights; adverse
weather conditions; climate change; damage to our brand image, corporate
reputation and social license from negative publicity, whether or not
warranted, concerning product safety or quality, human and workplace
rights, obesity or other issues; changes in, or failure to comply with,
the laws and regulations applicable to our products or our business
operations; changes in accounting standards; an inability to achieve our
overall long-term growth objectives; deterioration of global credit
market conditions; default by or failure of one or more of our
counterparty financial institutions; an inability to renew collective
bargaining agreements on satisfactory terms, or strikes, work stoppages
or labor unrest experienced by us or our bottling partners; future
impairment charges; future multi-employer pension plan withdrawal
liabilities; an inability to successfully integrate and manage our
company-owned or -controlled bottling operations or other acquired
businesses or brands; an inability to successfully manage our
refranchising activities; failure to realize a significant portion of
the anticipated benefits of our strategic relationship with Monster;
global or regional catastrophic events; and other risks discussed in our
company’s filings with the Securities and Exchange Commission (SEC),
including our Annual Report on Form 10-K for the year ended December 31,
2018 and our subsequently filed Quarterly Report on Form 10-Q, which
filings are available from the SEC. You should not place undue reliance
on forward-looking statements, which speak only as of the date they are
made. The Coca-Cola Company undertakes no obligation to publicly update
or revise any forward-looking statements.
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