As a result of mounting political uncertainty, slowing economic growth, and an abnormally strong dollar, Coca-Cola (NYSE: KO) has stated that its projected growth for this year is at a meager 4%.
Last year, growth was forecasted to be 5%.
The low projections caused the beverage company's shares to fall by around 8%, due to investor concern about its performance in light of Brexit and other potentially detrimental factors.
"The largest risk for our business is the potential for tariffs or delays in transportation," Nik Jhangiani, the company's CFO said on a conference call Thursday. "Clearly the impact will ultimately depend on the form Brexit takes."
Coca-Cola has started stockpiling ingredients in the UK to safeguard itself to potential supply chain disruptions and ensure production continues to run smoothly.
Beyond Brexit, investors are also worried about tariffs on Chinese goods that could come into effect at the start of March, which makes the disruptions to supply even more concerning.
CEO James Quincey termed the projections "prudent" while answering anxious investors discussing fourth quarter and full year earnings for 2019. He continued that this year will "be more volatile and uncertain than 2018."
That said, Quincey also claimed he was "pleased with our strong organic revenue and earnings growth in 2018," because they "demonstrate progress in our transformation as a consumer-centric, total beverage company."
Either way, with Brexit about 40 days away and no deal in sight, it is clear that the outcome will affect Coca-Cola seriously. Given that a fifth of the company's sales are grounded in the UK and that most raw materials for the product are imported, investors will need to keep close tabs on how politicization of the supply chain ends up manifesting itself in hindered growth.
"We are proactively trying to minimize any potential impact," Jhangiani said. "There are still many unknowns though at this stage."