Financial Report Analysis Coca-Cola & Pepsi
Background
Coca-Cola
Coca-Cola was founded in 1886 by John Pemberton who was a civil war veteran and Atlanta pharmacist. Today, Coca-Cola company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, over 10 billion gallons, used to produce nearly 400 beverage brands. Also, Coca-Cola has been ranked the best value of brand name on the world for more than 10 years.
Pepsi
Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded by Herman W.Lay, also in 1932. Pepsi is the second largest beverage company on the world.
This is a very special case that both of companies, Coca-Cola and Pepsi, are two of the best food companies on the world with similar products and same market.
1. Profitability
2003 2002 2001 2000 1999
Pepsi Coke Pepsi Coke Pepsi Coke Pepsi Coke Pepsi Coke
Return on sales 13.23% 20.70% 12.00% 15.60% 9.88% 22.60% 9.98% 12.50% 10.07% 14.50%
Gross margin 54.10% 63.10% 54.09% 63.70% 60.09% 65.60% 59.86% 64.30% 49.30% 64.20%
Operating profit/Sales 17.73% 24.80% 17.18% 27.90% 17.73% 30.50% 17.09% 21.30% 13.84% 23.80%
EBIT/Sales 18.51% 26.10% 17.73% 28.10% 13.53% 32.30% 14.76% 19.60% 20.99% 22.80%
EBITDA/Sales 23.04% 29.28% 22.18% 31.04% 17.55% 33.37% 19.05% 23.95% 26.67% 25.49%
Compared to average profitability of industry, both companies have performed well. Coca-Cola's, however, profitability is relatively high than Pepsi's. Some reasons caused it as following:
1.1 Cost of Goods Sold: Pepsi's COSD is critical high than Coca-Cola. Average
Of Pepsi was 55.5% and average of CODS was 37%. It means that Coca-Cola strictly controlled cost of goods,
1.2 Selling and administration cost: Pepsi's cost of this item was still a little high
than Coca-Cola's.
Both costs decided Coca-Cola's profitability being better than Pepsi.
Coca-Cola
Coca-Cola was founded in 1886 by John Pemberton who was a civil war veteran and Atlanta pharmacist. Today, Coca-Cola company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, over 10 billion gallons, used to produce nearly 400 beverage brands. Also, Coca-Cola has been ranked the best value of brand name on the world for more than 10 years.
Pepsi
Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded by Herman W.Lay, also in 1932. Pepsi is the second largest beverage company on the world.
This is a very special case that both of companies, Coca-Cola and Pepsi, are two of the best food companies on the world with similar products and same market.
1. Profitability
2003 2002 2001 2000 1999
Pepsi Coke Pepsi Coke Pepsi Coke Pepsi Coke Pepsi Coke
Return on sales 13.23% 20.70% 12.00% 15.60% 9.88% 22.60% 9.98% 12.50% 10.07% 14.50%
Gross margin 54.10% 63.10% 54.09% 63.70% 60.09% 65.60% 59.86% 64.30% 49.30% 64.20%
Operating profit/Sales 17.73% 24.80% 17.18% 27.90% 17.73% 30.50% 17.09% 21.30% 13.84% 23.80%
EBIT/Sales 18.51% 26.10% 17.73% 28.10% 13.53% 32.30% 14.76% 19.60% 20.99% 22.80%
EBITDA/Sales 23.04% 29.28% 22.18% 31.04% 17.55% 33.37% 19.05% 23.95% 26.67% 25.49%
Compared to average profitability of industry, both companies have performed well. Coca-Cola's, however, profitability is relatively high than Pepsi's. Some reasons caused it as following:
1.1 Cost of Goods Sold: Pepsi's COSD is critical high than Coca-Cola. Average
Of Pepsi was 55.5% and average of CODS was 37%. It means that Coca-Cola strictly controlled cost of goods,
1.2 Selling and administration cost: Pepsi's cost of this item was still a little high
than Coca-Cola's.
Both costs decided Coca-Cola's profitability being better than Pepsi.