Coca-Cola announced quarterly revenue and profitability on Tuesday that above analysts’ projections as the company’s Fanta and Fairlife beverage sales increased.
The massive beverage company increased its organic revenue projection for the entire year. In premarket trading, the company’s shares increased by less than 1%.
After a year of $3.11 billion, or 72 cents per share, Coke announced first-quarter net income attributable to the firm of $3.18 billion, or 74 cents per share.
A $760 million non-cash impairment charge for Bodyarmor was also reported by the business. For $5.6 billion, the corporation paid to fully buy the sports drink brand in 2021.
According to CFO John Murphy, the charge is a result of updated estimates and an increased discount rate following the transaction. Since Prime Energy and other upstarts are stealing market share, the sports drink category has become more competitive.
The beverage juggernaut made seventy-two cents per share if that expense and other items are subtracted.
At $11.30 billion, net sales increased by 3%. When acquisitions, divestitures, and foreign exchange are not taken into account, organic revenues increased 11% during the quarter.
Coke reported a 1% gain in its global unit case volume for the quarter, but no change in its North American volume. Foreign currency and pricing are not included in the statistics.
CEO James Quincey informed analysts on the company’s conference call that North American traffic began the quarter slowly but increased sequentially in February and March. The American consumer, he claimed, “remains in good shape,” despite the fact that lower-class consumers have made fewer purchases. As consumers cut back on their spending, some of Coke’s fast-food partners, including McDonald’s, have suffered a slowdown in their US sales.
The sparkling soft drink segment of Coke, which sells its brand-name soda, recorded a 2% increase in volume. Coke has been experimenting with different drink recipes, such as those for Sprite and Fanta.
The demand in North America drove a 2% growth in volume for the company’s juice, dairy, and plant-based drink division during the quarter.
The only division of Coke to report falling volume was water, sports, coffee, and tea. The segment’s volume decreased by 2% during the quarter due to a decline in demand for coffee, sports drinks, and bottled water.
The overall increase in Coke’s prices from a year ago was 13%; however, hyperinflation in some regions, such as Argentina, was responsible for nearly half of that increase.
Coke has revised its forecast for organic sales growth for the entire year from 6% to 7% to 8% to 9%. The company partially explained its revised view by stating that it expects price increases in certain countries that are experiencing “intense inflation.”
Coke restated its forecast of 4% to 5% rise in comparable earnings for the entire year.
The business anticipates a 6% currency headwind and a 5%–6% hit from acquisitions, divestitures, and structural changes in its comparable revenue for the second quarter. Additionally, it is anticipated that currency changes may hinder its comparable profits per share by 8% to 9%.
