Coca-Cola's new Chief Financial Officer, John Murphy, has just referred his inner-currency trader for a somewhat contrarian USD claim.
"We believe the dollar is on – towards the end of a strong cycle and that is why we believe we will be in a favorable environment over the next 1.5 years," Murphy told Wall Street on Tuesday. Analysts on Coca-Cola's second-quarter earnings forecast.
Investors of Coca-Cola (KO) are certain Murphy hopes that this reputation will prevail.
The beverage giant, which is exposed to around 70 global currencies, posted earnings per share in the second quarter that was hit by currency weaknesses at 9%. This headwind is primarily due to the continued strength of the US dollar, which has fueled President Donald Trump's anger in recent months. The US dollar has increased to a large extent over the past year, putting pressure on the upper and lower limits of multinationals such as Coca-Cola, Caterpillar (CAT) and Kimberly-Clark (KMB).
A strong dollar tends to lessen the value of overseas sales and profits for multinationals. The US dollar rose 3.2% last year alone.
Currencies in emerging markets such as Brazil and India were also particularly volatile.
Headwinds in currencies
Coke expects the strength of the US dollar to affect the third quarter operating income by approximately 6%. Murphy then sees the impact worsen in the fourth quarter and in 2020 and investors hope that the company's sales and profits will get a good push.
Despite global currency issues, Coca-Cola blew Wall Street off with its second-quarter results. The company continues to successfully control costs, raise prices and launch new products. This was evident in the quarter.
Coca-Cola's adjusted earnings per share were 63 cents higher than analyst forecasts for 61 cents per share. Total revenue was forecast to grow 6% to $ 10 billion.
Organic sales growth, a key indicator for Coke, closely monitored by Wall Street, rose 6%. Analysts had expected growth of 4%.
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