The resurgence of the coronavirus again weighed on Coca-Cola's quarterly results released Wednesday as the beverage giant expressed confidence it would prevail in a potentially costly US tax dispute.
Coca-Cola suffered an "incremental" sales hit in December and through early February due to rising Covid-19 cases in key markets.
However, the company managed to report better-than-expected profits due to cost-cutting measures that included a restructuring that will trim 2,200 jobs worldwide.
Coca-Cola has also reduced spending on marketing during the pandemic, executives said.
Executives expressed optimism in a recovery once vaccines are widely distributed and offered a full-year forecast for the first time since the pandemic began.
Coca-Cola reported that fourth quarter profits fell 29 percent to $1.4 billion on a five percent decline in revenues to $8.6 billion.
The company projected full-year revenue growth of "high single digits" in 2021, excluding foreign exchange and acquisition effects.
The forecast was built on Coca-Cola's analysis of how long the pandemic would last in each country and then how long it would take each country to return to 2019 levels of economic growth, executives said.
Coca-Cola is anticipating "some level of asynchronous recovery depending both on vaccine distribution and other macroeconomic factors," said Chief Executive James Quincey on a conference call with analysts.
Coca-Cola set aside tax reserves of $438 million in 2020 connected to six-year-old litigation with US tax authorities over how the soda giant reports income from some overseas markets.
In November, a US court largely sided with the Internal Revenue Service on the matter, but Coca-Cola has said it would continue to fight the suit.
The IRS sent a notice to Coca-Cola in 2015 stating that the company owed potentially $3.3 billion in taxes over the three-year period, plus interest.
But on Wednesday, Coca-Cola dramatically increased the potential liability of the case, saying the hit could reach $12 billion.
"While the company disagrees with the IRS' position and intends to vigorously defend its position, it is possible that some portion or all of the adjustment sustained by the US Tax Court could ultimately be upheld," Coca-Cola said.
"We will ultimately prevail on appeal," Quincey said on the conference call.
Shares rose 0.3 percent to $49.83 in mid-morning trading.