In a recent earnings report, Coca-Cola showcased its resilience in the face of rising commodity costs and pricing challenges. The beverage giant's third-quarter earnings and revenue surpassed analysts' expectations, demonstrating that consumers are willing to pay a premium for their favorite drinks, from the iconic soda to Simply juice.
Key Highlights from the Earnings Report:
- Coca-Cola reported an adjusted earnings per share of 74 cents, outperforming the expected 69 cents.
- The company's revenue stood at $11.91 billion, surpassing the anticipated $11.44 billion.
- The net income attributable to shareholders for the third quarter was $3.09 billion, or 71 cents per share. This is a notable increase from the previous year's $2.83 billion, or 65 cents per share.
- Excluding various factors such as transaction gains, restructuring costs, and other items, Coca-Cola's earnings per share were 74 cents.
- The net sales witnessed an 8% rise, amounting to $11.91 billion. When considering organic revenue, which excludes the effects of acquisitions and divestitures, there was an 11% increase.
Despite the challenges posed by rising commodity costs, Coca-Cola has strategically increased the prices of its products over the past two years. However, in a move that surprised many, the company announced in July that it would not be raising prices further in the U.S. and Europe for the remainder of the year. This decision did not deter its growth, as the prices in this quarter were still 9% higher than the same period last year.
Interestingly, even with the higher prices, Coca-Cola's unit case volume grew by 2% in the quarter. This metric, which excludes factors like pricing and currency, indicates the actual demand for the product. While Coca-Cola has experienced a slight dip in demand, its competitor, PepsiCo, has faced more significant declines.
Diving deeper into the numbers, Coca-Cola's North American volume remained steady. However, there was a noticeable increase in the demand for Coke Zero Sugar and Fairlife dairy drinks. In contrast, Pepsi reported a 6% decline in its North American beverage volume for its third quarter.
All of Coca-Cola's beverage divisions reported volume growth:
- Sparkling soft drinks and juice, dairy, and plant-based beverage divisions both saw a 2% increase in volume.
- The water, sports, coffee, and tea business division reported a 1% volume growth.
Looking forward, Coca-Cola has revised its full-year outlook. The company now anticipates a comparable earnings per share growth of 7% to 8%, an increase from the previously estimated 5% to 6%. Additionally, the forecast for organic revenue has been adjusted to an increase of 10% to 11%, up from the earlier 8% to 9% range.
As 2024 approaches, Coca-Cola predicts a mid single-digit headwind from currency fluctuations. The company has stated that it will provide a comprehensive 2024 outlook during its fourth-quarter earnings report early next year.
