Coca-Cola Co said on Tuesday its expected current-quarter results to take a hit as restaurants, theatres and other venues that represent about half of the company’s revenue remain closed because of the coronavirus pandemic.
The soda maker’s shares, a Dow 30 component, were down about 4%. They have lost about 16% so far this year.
Coca-Cola makes syrups and concentrates and through its bottlers distributes them to fast-food chains, theatres, amusement parks and other venues, most of which have either closed all operations or limited their businesses.
Several concerts and sporting events, including the company-sponsored Tokyo 2020 Olympics, have been postponed or cancelled.
As a result, volumes fell about 25% globally since the beginning of April, largely stemming from the loss of sales other than at retail stores, the company said.
The hit to second-quarter results will be material, it said, though the ultimate impact on this quarter and the rest of the year is unknown at this time. Coca-Cola added it expected comparable revenue to include 4% to 5% hit from a stronger dollar.
The Atlanta-based beverage maker said, however, it saw stockpiling in some markets and a sharp rise in e-commerce sales, as consumers rushed to buy goods in preparation for lockdowns.
“It’s certainly not the case that e-commerce is offsetting the losses... E-commerce, even though it’s doubled in sales, for a beverage category, it’s still a very small percentage of the total beverage category,” chief executive officer James Quincey told analysts.
The rapid spread of the novel coronavirus, first detected in the Chinese city of Wuhan last December, has claimed the lives of about 170,000 across the globe and has forced a wide range of businesses to shut doors.
“We do know that our over 134 years of business, we’ve seen many types of crisis.... We are in a better position today than we were heading into previous periods of challenge,” Quincey said.
For the first quarter, the soda maker reported better-than-expected revenue and profit, and said it expected conditions to start improving from mid-year.
For the first quarter ended March 27, net revenue fell 1% to $8.6 billion. Analysts were expecting $8.28 billion, according to IBES data from Refinitiv.
Excluding one-time items, Coke earned 51 cents per share, beating market consensus estimate of 44 cents.
UBS analyst Sean King noted that first-quarter results were better than feared, but the company had a tougher road ahead.
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