Coca-Cola Company reported solid quarterly earnings on Wednesday by beating estimates, for the most part since price increases offset weakening consumer demand. Still, the company shares fell 2% during morning trading despite this great financial performance.
LSEG survey showed the adjusted earnings per share of Coca-Cola came in at 77 cents, well above what analysts had forecasted. In fact, it came out at 74 cents. The company’s adjusted revenue came in at $11.95 billion, much better than the estimated $11.60 billion. Net income to the shareholders was at $2.85 billion or 66 cents per share lower compared to last years at $3.09 billion or 71 cents a share. Adjusted EPS now stands at 77 cents if certain items were stripped out.
The company’s adjusted net sales were flat year over year at $11.95 billion. Organic revenue growth for Coca-Cola was stronger, however, and for the quarter was 9% above the comparable 2017 period, absent the impact of acquisitions and divestitures as well as currency. Unit case volume fell 1%, primarily from reduced demand in some global markets. Jim Quincey, the Chief Executive Officer, said one value-seeking behavior trend seen among customers was affecting both Coca-Cola volumes and serving sizes in food service.
While its competitor, PepsiCo, has faced a decline in recent quarters. The unit case volume for the beverage giant at North America has been flat as declines across water, sports drinks, coffee, and tea have been offset by gains in the core soda, juice, and dairy offerings of the business. PepsiCo has faced problems due to product recalls in its Quaker Foods division and negative consumption trends. Consumers are especially keen on premium products, for example, Fairlife milk and Topo Chico seltzers, sold at a premium price.
Regionally, Coca-Cola reported a 2%-unit case volume decline for Europe, Middle East and Africa, and Asia Pacific. China and Turkey registered major declines. Latin America also reported flat volume numbers. The sparkling soft drinks business and the juice business each declined 3%. Bottled water volume decreased 6%.
The beverage giant raised its prices by 10% due to inflationary pressures in markets such as Argentina, strategic price rises, and changing consumer behavior to higher-priced goods. Going forward, the company is projecting organic revenue growth of about 10% for 2024, which aligns with the guidance provided earlier at 9% to 10%. It will also guide comparable earnings per share to grow 5% to 6% and will provide a full-year outlook for 2025 with its fourth-quarter earnings report. Currency headwinds will be a headwind next year, having a low single-digit impact on comparable revenue and mid-single-digit impact on earnings per share.
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