Coca-Cola tops earnings estimates, hikes revenue outlook on higher prices

A Coca-Cola building in Zagreb, Croatia, Nov. 8, 2023.Denis Lovrovic | AFP | Getty Images

Coca-Cola on Tuesday reported quarterly earnings and revenue that beat analysts' expectations as consumers drank more of its Fanta and Fairlife beverages.

The beverage giant also raised its full-year outlook for organic revenue.

Shares of the company rose less than 1% in premarket trading.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: 72 cents adjusted vs. 70 cents expected
• Revenue: $11.30 billion vs. $11.01 billion expected

Coke reported first-quarter net income attributable to the company of $3.18 billion, or 74 cents per share, up from $3.11 billion, or 72 cents a share, a year earlier.

The company also recorded a $760 million non-cash impairment charge for Bodyarmor. The company fully acquired the sports drink brand in 2021 for $5.6 billion.

CFO John Murphy said the charge reflects revised projections and a higher discount rate since the acquisition. The sports drink category has grown more competitive as upstarts like Prime Energy steal market share.

Excluding that charge and other items, the beverage giant earned 72 cents per share.

Net sales rose 3% to $11.30 billion. Organic sales, which strip out the impact of acquisitions, divestitures and foreign exchange, climbed 11% in the quarter.

Coke reported its global unit case volume increased 1%, but its North American volume was flat for the quarter. The metric excludes pricing and foreign currency.

North American volume started the quarter slow, but picked up sequentially in February and March, CEO James Quincey told analysts on the company's conference call. He said the U.S. consumer “remains in good shape,” although low-income customers have lost some of their purchasing power. Some of Coke's fast-food partners, like McDonald's, have seen their U.S. sales slow as diners pull back their spending.

Coke's sparkling soft drinks division, which includes its namesake soda, reported volume growth of 2%. Coke has been tweaking the formulas for some of its drinks, like Fanta and Sprite.

The company's juice, dairy and plant-based drinks segment saw volume grow 2% in the quarter, fueled by demand in North America.

Only Coke's water, sports, coffee and tea division reported declining volume. The segment's volume fell 2% in the quarter as bottled water, sports drinks and coffee all saw demand weaken.

Coke's overall prices were up 13% compared with the year-ago period, but about half of that came from hyperinflation in certain markets, like Argentina.

For the full year, Coke is now expecting organic revenue growth of 8% to 9%, up from its prior range of 6% to 7%. The company said it anticipates price hikes in certain markets experiencing “intense inflation,” leading in part to its new outlook.

Coke reiterated its outlook for full-year comparable earnings growth of 4% to 5%.

In the second quarter, the company expects that its comparable revenue will include a 6% currency headwind and a 5% to 6% hit from acquisitions, divestitures and structural changes. Currency fluctuations are also expected to pose a 8% to 9% headwind to its comparable earnings per share.