Coca-Cola reported quarterly earnings and revenue on Wednesday that surpassed analysts’ expectations, driven by higher prices that helped offset weaker demand.
Despite the better-than-expected results, shares of the company fell 2% during morning trading.
Here’s what the company reported compared to Wall Street’s expectations, based on a survey of analysts by LSEG:
- Earnings per share: 77 cents adjusted vs. 74 cents expected
- Revenue: $11.95 billion adjusted vs. $11.60 billion expected
Coca-Cola’s third-quarter net income attributable to shareholders was $2.85 billion, or 66 cents per share, down from $3.09 billion, or 71 cents per share, in the same period last year. Excluding certain items, the company earned 77 cents per share.
Adjusted net sales remained roughly flat at $11.95 billion compared to a year earlier. However, Coca-Cola’s organic revenue, which excludes acquisitions, divestitures, and currency impacts, rose 9% during the quarter.
The company saw a 1% decline in unit case volume, primarily due to weakening demand in some international markets. Unit case volume strips out the effects of pricing and foreign exchange to reflect true consumer demand. Coca-Cola, like many consumer companies, has reported that customers are becoming more price-sensitive, leading to reduced demand as prices remain high.
James Quincey, CEO of Coca-Cola, noted that some consumers are “exhibiting value-seeking behavior” by buying fewer packs of products or opting for smaller-sized drinks at fast-food chains.
Even with these challenges, Coca-Cola has outperformed its rival PepsiCo, which has been grappling with a U.S. consumer base that is drinking and snacking less, as well as the impact of Quaker Foods recalls. PepsiCo reported a 3% decline in North American beverage volume during its third quarter.
In North America, Coca-Cola’s unit case volume remained flat, with reduced demand for water, sports drinks, coffee, and tea offset by growth in its core soda, juice, dairy, plant-based beverages, and sparkling flavors. Premium products like Fairlife milk and Topo Chico seltzers have performed well, despite their higher prices.
However, unit case volume fell 2% in both the Europe, Middle East, and Africa (EMEA) and Asia-Pacific regions, with notable declines in China and Turkey. Latin America reported flat volume, similar to North America.
Globally, volume for Coca-Cola’s sparkling soft drinks, including Sprite and Coke, was flat, while its juice, dairy, and plant-based beverages division saw a 3% decline in volume. Its water, sports, coffee, and tea segment saw a 4% drop, led by a 6% decline in bottled water sales.
Coca-Cola’s pricing rose 10%, with about 4% of that increase coming from markets facing intense inflation, such as Argentina. The remainder was due to price hikes and customers opting for more premium offerings.
Looking ahead, Coca-Cola expects organic revenue growth of around 10% for 2024, at the high end of its previous range of 9% to 10%. The company reiterated its projection of a 5% to 6% increase in comparable earnings per share.
Coca-Cola will provide its full 2025 outlook with its fourth-quarter earnings report but is already projecting that currency fluctuations will pose a challenge next year, with a low-single-digit headwind for revenue and a mid-single-digit impact on earnings per share.
