The global macro environment was weak in 2011, but beverage companies benefited from stronger consumer spending trends in emerging markets. In a new report to clients, Citi analysts Wendy Nicholson and Peter J Chun write that they expect more of the same this year. The weakness of the U.S. dollar in 2011 saw foreign exchange act as a tailwind to the beverage industry through much of 2011.
That has however reversed course and beverage companies expect it to become a drag on sales and profits this year. Drawing on their earnings conference calls, Nicholson and Chun homed in on how foreign exchange could impact the companies.
The Coca-Cola Company: “We currently expect currencies to have a low single digit negative impact on operating income for the first quarter of this year and a mid-single digit negative impact for the full-year.”
Coca-Cola Enterprises: “Based on recent rates, currency translation would decrease full-year earnings per share by approximately 6%.”
Dr. Pepper Snapple Group: “Foreign currency is expected to be a slight headwind to net sales and profit growth for the year.”
Pepsico Inc: “We anticipate F/X to be a three point headwind in 2012.”
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