Coca-Cola Reports First Quarter 2024 Results and Provides Updated Guidance

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Coca-Cola reported positive growth in global unit case volume and net revenues in the first quarter of 2024. Despite a decline in operating income, the company saw growth in EPS and market share. The company introduced new products and continued to drive digital capabilities to enhance consumer engagement. Coca-Cola also updated its trademark offerings and expanded distribution in various regions. While the company faced challenges in certain markets, it remains optimistic about sustained success.

Positive

• Positive growth in global unit case volume and net revenues

• Increased market share in total nonalcoholic ready-to-drink beverages

• Growth in EPS and market share despite a decline in operating income

• Introduction of new products like Coca-Cola Happy Tears Zero Sugar

• Expansion of digital capabilities to deepen relationships with consumers and customers

• Continued innovation and expansion of trademark offerings

Negative

• Decline in operating income by 36%

• Charge related to remeasurement of contingent consideration liability and non-cash impairment charge impacting operating margin

• Currency headwinds affecting operating income and EPS

• Challenges in certain markets leading to declines in unit case volume

Financial Analyst

The reported 3% growth in net revenues to $11.3 billion, with an 11% organic revenue increase, illustrates a robust pricing strategy amidst inflationary pressures. This demonstrates Coca-Cola's ability to exert pricing power due to strong brand equity. The 13% price/mix growth indicates a successful shift towards higher-margin products or strategic price increases, both of which are essential in an inflationary environment.

However, the significant 36% decline in operating income is a concern, driven largely by non-recurring charges including a $765 million remeasurement charge and a $760 million impairment related to BODYARMOR. These are substantial figures that warrant investor attention as they reflect on strategic acquisitions and brand valuations. The decline in concentrate sales being 3 points behind unit case volume could be indicative of operational inefficiencies or irregularities in demand forecasting, which need to be closely monitored in future quarters.

The expansion of comparable operating margin to 32.4% indicates a strong underlying business performance, adjusting for one-time charges and currency effects. The 3% EPS growth and the 7% growth in comparable EPS reflect a resilient bottom line, despite macroeconomic challenges. In the short term, such resilience is favorable, but investors should be vigilant about the long-term sustainability of these margins in the face of persistent currency headwinds and volatile global markets.

Market Research Analyst

The 1% growth in global unit case volume is modest and likely reflects market saturation in developed markets versus growth opportunities in emerging markets. Gains in value share in total nonalcoholic ready-to-drink beverages suggest effective marketing and innovation strategies, such as the launch of Coca-Cola Happy Tears Zero Sugar and Foodmarks by Coca-Cola. These novel marketing efforts seem to have resonated well with consumers, yielding more than 2 billion impressions and contributing to volume growth.

On the digital front, Coca-Cola’s investments in acquiring first-party data through scannable codes and enhancing B2B platforms with an 8% increase in connected customers represent a strategic push to modernize its sales and marketing channels. This is a positive sign for long-term competitiveness as consumer behaviors shift increasingly toward digital engagement.

Additionally, the mention of AI-enabled suggested orders in Latin America and India indicates a trend towards leveraging technology for inventory management and sales optimization, which is a sign of operational advancements that can contribute to improved margins and market share growth in the long run.

Investment Analyst

The notable increase in cash flow from operations to $528 million, up by $368 million from the prior year, combined with a substantial increase in free cash flow to $158 million, is a strong signal to investors of the company's operational efficiency and ability to generate cash in a dynamic economic environment. These figures represent the health of the core business and its ability to fund dividends, share repurchases and further investments.

Given the forecast of persistent currency headwinds, investors should be aware of the potential impact on future earnings and cash flows. Diversification across geographies may act as a natural hedge, but it's critical for the company to continue to optimize its currency risk management strategies to mitigate the negative effects on its financial performance.

Global Unit Case Volume Grew 1%

Net Revenues Grew 3%;

Organic Revenues (Non-GAAP) Grew 11%

Operating Income Declined 36%;

Comparable Currency Neutral Operating Income (Non-GAAP) Grew 13%

Operating Margin Was 18.9% Versus 30.7% in the Prior Year;

Comparable Operating Margin (Non-GAAP) Was 32.4% Versus 31.8% in the Prior Year

EPS Grew 3% to $0.74; Comparable EPS (Non-GAAP) Grew 7% to $0.72

ATLANTA--(BUSINESS WIRE)-- The Coca-Cola Company today reported first quarter 2024 results. “We’re encouraged by our start to 2024, delivering another quarter of volume, topline and earnings growth amidst a dynamic backdrop,” said James Quincey, Chairman and CEO of The Coca-Cola Company. “We believe our global system is primed for sustained success, thanks to the right strategies, clear alignment, a powerful portfolio and strong execution.”

Highlights

Quarterly Performance

• Revenues: Net revenues grew 3% to $11.3 billion, and organic revenues (non-GAAP) grew 11%. Revenue performance included 13% growth in price/mix and a 2% decline in concentrate sales. Concentrate sales were 3 points behind unit case volume, largely due to the timing of concentrate shipments and the impact of one less day in the quarter.

• Operating margin: Operating margin was 18.9% versus 30.7% in the prior year, while comparable operating margin (non-GAAP) was 32.4% versus 31.8% in the prior year. The operating margin decline was driven by items impacting comparability, including a charge of $765 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, LLC (“fairlife”) in 2020 and a non-cash impairment charge of $760 million related to the BODYARMOR trademark, as well as currency headwinds. Comparable operating margin (non-GAAP) expansion was primarily driven by the impact of refranchising bottling operations and strong topline growth, partially offset by currency headwinds and an increase in marketing investments.

• Earnings per share: EPS grew 3% to $0.74, while comparable EPS (non-GAAP) grew 7% to $0.72. EPS performance included the impact of a 7-point currency headwind, while comparable EPS (non-GAAP) performance included the impact of a 9-point currency headwind.

• Market share: The company gained value share in total nonalcoholic ready-to-drink (NARTD) beverages.

• Cash flow: Cash flow from operations was $528 million, an increase of $368 million versus the prior year, driven by strong business performance and working capital initiatives, partially offset by currency headwinds. Free cash flow (non-GAAP) was $158 million, an increase of $274 million versus the prior year.

Company Updates

• Trademark Coca-Cola led growth supported by broad innovation: With consumers increasing their engagement across various social media platforms, the company launched Coca-Cola Happy Tears Zero Sugar, its first product sold exclusively on social media in the United States and Great Britain. Building on the Coke Creations platform, Happy Tears reached consumers with a limited-edition beverage inspired by tears of joy from small acts of kindness. “Hype kits” containing Coca-Cola Happy Tears Zero Sugar and kindness-themed accessories sold out in less than 24 hours and garnered more than 2 billion impressions. In the quarter, the company also introduced Foodmarks by Coca-Cola — as part of the “Recipe for Magic” platform — in over 4,000 locations worldwide. To drive excitement, unique dining experiences were created that pair Coke with meals and local culture. In Thailand, legendary restaurants were transformed into Foodmarks, celebrating street food, music and Coca-Cola. This kind of marketing, which connects consumption occasions with live experiences and consumer passion points, contributed to Trademark Coca-Cola value share gains and volume growth ahead of total company growth. The company also continued to meet consumers’ evolving needs by extending offerings and distribution with affordable and premium packages. In Africa, packages at affordable price points, such as returnable glass and plastic, grew volume double digits for the second consecutive quarter. In the United States, the company continued to expand mini-can availability through mini-can variety packs in the club channel.

• Continuing to drive digital capabilities: The company continued to leverage digital tools to deepen end-to-end relationships with consumers and customers. For example, the company used scannable codes on its packaging to engage consumers, collect first-party data and drive transactions. In the first quarter, there were over 200 active connected packs in more than 40 global markets offering exclusive personalized experiences to consumers. Additionally, the company and its bottling partners continue to invest in digitizing their customer base by integrating fragmented trade customers into B2B platforms. In the first quarter, there was an 8% increase of connected customers compared to the prior year, reaching nearly 8 million customers on B2B platforms. The company continues to utilize the power of AI, as AI-enabled suggested orders are fueling growth. In Latin America, suggested order capabilities have benefited over 3 million outlets, while in India, retailers are leveraging AI-powered suggested order recommendations on Coke Buddy, a customer engagement platform, to place bulk orders via the app. At the shopper level, digital capabilities enabled bottling partners to personalize point-of-sale messaging and drive basket incidence more effectively and efficiently. In Japan’s vending channel, the Coke On app has reached over 50 million downloads and accounts for more than 1 million transactions per day.

Operating Review – Three Months Ended March 29, 2024

Revenues and Volume
Percent Change	Concentrate Sales1	Price/Mix	Currency Impact	Acquisitions, Divestitures and Structural Changes, Net	Reported Net Revenues		Organic Revenues2		Unit Case Volume3
Consolidated	(2)	13	(6)	(2)	3		11		1
Europe, Middle East & Africa	(6)	22	(18)	0	(3)		15		2
Latin America	(1)	22	(11)	0	10		22		4
North America	0	7	0	0	7		7		0
Asia Pacific	(1)	8	(3)	3	7		7		(2)
Global Ventures4	2	(1)	3	0	3		1		1
Bottling Investments	6	6	(5)	(15)	(7)		13		(7)

Operating Income and EPS
Percent Change	Reported Operating Income	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral Operating Income2
Consolidated	(36)	(41)	(8)	13
Europe, Middle East & Africa	(5)	1	(16)	10
Latin America	10	1	(8)	17
North America	(57)	(68)	0	11
Asia Pacific	16	4	(5)	17
Global Ventures	7	8	3	(4)
Bottling Investments	13	(3)	(3)	19
Percent Change	Reported EPS	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral EPS2
Consolidated	3	(4)	(9)	15

Note: Certain rows may not add due to rounding.
1	For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any.
2	Organic revenues, comparable currency neutral operating income and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section.
3	Unit case volume is computed based on average daily sales.
4	Due to the combination of multiple business models in the Global Ventures operating segment, the composition of concentrate sales and price/mix may fluctuate materially from period to period. Therefore, the company places greater focus on revenue growth as the best indicator of underlying performance of the Global Ventures operating segment.

In addition to the data in the preceding tables, operating results included the following:

Consolidated

• Unit case volume grew 1%. Developed markets were even, while developing and emerging markets grew low single digits, driven by growth in Brazil, the Philippines and Nigeria.

Unit case volume performance included the following:

• Sparkling soft drinks grew 2%, led by strong performance in Latin America. Trademark Coca-Cola grew 2%, driven by growth in Latin America, Asia Pacific and North America. Coca-Cola Zero Sugar grew 6%, driven by growth in Latin America, Europe, Middle East and Africa, and North America. Sparkling flavors were even, as growth in Europe, Middle East and Africa and Latin America was offset by a decline in Asia Pacific.

• Juice, value-added dairy and plant-based beverages grew 2%, led by North America.

• Water, sports, coffee and tea declined 2%. Water declined 2%, driven by Asia Pacific and North America. Sports drinks declined 3%, as growth in Latin America and Europe, Middle East and Africa was more than offset by a decline in North America. Coffee declined 3%, primarily due to the performance of Costa coffee in the United Kingdom. Tea grew 2%, driven by growth in Europe, Middle East and Africa and Latin America.

• Price/mix grew 13%. Approximately 6 points were driven by pricing from markets experiencing intense inflation, with the remainder driven by pricing actions in the marketplace and favorable mix. Concentrate sales were 3 points behind unit case volume, primarily due to the timing of concentrate shipments as well as the impact of one less day in the quarter.

• Operating income declined 36%, driven by items impacting comparability, including a charge of $765 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife and a non-cash impairment charge of $760 million related to the BODYARMOR trademark, as well as currency headwinds. Comparable currency neutral operating income (non-GAAP) grew 13%. Performance was driven by organic revenue (non-GAAP) growth across all operating segments, partially offset by an increase in marketing investments.

Europe, Middle East & Africa

• Unit case volume grew 2%, driven by growth in water, sports, coffee and tea as well as sparkling flavors. Growth was led by Nigeria, Germany and South Africa.

• Price/mix grew 22%. Approximately two-thirds was driven by pricing from markets experiencing intense inflation, with the remainder driven primarily by pricing actions across operating units. Concentrate sales were 8 points behind unit case volume, primarily due to the timing of concentrate shipments as well as the impact of one less day in the quarter.

• Operating income declined 5%, which included a 15-point currency headwind and items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 10%, primarily driven by strong organic revenue (non-GAAP) growth, partially offset by higher operating expenses and an increase in marketing investments.

• The company gained value share in total NARTD beverages, led by share gains in Nigeria, South Africa and France.

Latin America

• Unit case volume grew 4%, driven by growth in Trademark Coca-Cola and water, sports, coffee and tea. Growth was led by Brazil and Mexico.

• Price/mix grew 22%. Approximately three-fourths was driven by the impact of inflationary pricing in Argentina, with the remainder driven by pricing actions in the marketplace, partially offset by category mix. Concentrate sales were 5 points behind unit case volume, primarily due to the timing of concentrate shipments and one less day in the quarter.

• Operating income grew 10%, which included a 7-point currency headwind and items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 17%, primarily driven by strong organic revenue (non-GAAP) growth, partially offset by an increase in marketing investments.

• The company lost value share in total NARTD beverages, as share gains in Mexico, Colombia and Ecuador were more than offset by losses in Argentina, Chile and Brazil.

North America

• Unit case volume was even as growth in juice, value-added dairy and plant-based beverages and Trademark Coca-Cola was offset by a decline in water, sports, coffee and tea.

• Price/mix grew 7%, driven by pricing actions in the marketplace and favorable category mix. Concentrate sales were in line with unit case volume.

• Operating income declined 57% for the quarter, driven by items impacting comparability, including a non-cash impairment charge of $760 million related to the BODYARMOR trademark. Comparable currency neutral operating income (non-GAAP) grew 11%, primarily driven by organic revenue (non-GAAP) growth.

• The company gained value share in total NARTD beverages, driven by sparkling soft drinks, value-added dairy, juice and water.

Asia Pacific

• Unit case volume declined 2%, as growth in Trademark Coca-Cola and juice, value-added dairy and plant-based beverages was more than offset by a decline in water, sports, coffee and tea. Growth in the Philippines, India, Vietnam and Indonesia was more than offset by a decline in China.

• Price/mix grew 8%, primarily driven by favorable category mix and pricing actions in the marketplace. Concentrate sales were 1 point ahead of unit case volume, primarily due to the timing of concentrate shipments.

• Operating income grew 16%, which included items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 17%, driven by organic revenue (non-GAAP) growth, partially offset by an increase in marketing investments.

• The company gained value share in total NARTD beverages, led by share gains in the Philippines, South Korea and Japan.

Global Ventures

• Net revenues grew 3%, and organic revenues (non-GAAP) grew 1%.

• Operating income grew 7%, which included items impacting comparability and a 3-point currency tailwind. Comparable currency neutral operating income (non-GAAP) declined 4%, driven by an increase in operating expenses and marketing investments.

Bottling Investments

• Unit case volume declined 7%, as growth in South Africa was more than offset by the impact of refranchising bottling operations.

• Price/mix grew 6%, driven by pricing actions across most markets as well as favorable mix.

• Operating income grew 13%, which included items impacting comparability and a 3-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 19%, driven by organic revenue (non-GAAP) growth, partially offset by higher operating expenses.

Outlook

The 2024 outlook information provided below includes forward-looking non-GAAP financial measures, which management uses in measuring performance. The company is not able to reconcile full-year 2024 projected organic revenues (non-GAAP) to full-year 2024 projected reported net revenues, full-year 2024 projected comparable net revenues (non-GAAP) to full-year 2024 projected reported net revenues, full-year 2024 projected underlying effective tax rate (non-GAAP) to full-year 2024 projected reported effective tax rate, full-year 2024 projected comparable currency neutral EPS (non-GAAP) to full-year 2024 projected reported EPS, or full-year 2024 projected comparable EPS (non-GAAP) to full-year 2024 projected reported EPS without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the exact timing and exact impact of acquisitions, divestitures and structural changes throughout 2024; the exact timing and exact amount of items impacting comparability throughout 2024; and the exact impact of fluctuations in foreign currency exchange rates throughout 2024. The unavailable information could have a significant impact on the company’s full-year 2024 reported financial results.

Full Year 2024

The company expects to deliver organic revenue (non-GAAP) growth of 8% to 9%, which consists of operating performance at the high end of the company’s long-term growth model and the anticipated pricing impact of a number of markets experiencing intense inflation. — Updated

For comparable net revenues (non-GAAP), the company expects a 4% to 5% currency headwind based on the current rates and including the impact of hedged positions. Comparable EPS (non-GAAP) percentage growth is expected to include a 7% to 8% currency headwind based on the current rates and including the impact of hedged positions. The majority of currency headwinds are due to currency devaluation resulting from intense inflation. — Updated

For comparable net revenues (non-GAAP), the company expects a 4% to 5% headwind from acquisitions, divestitures and structural changes. Comparable EPS (non-GAAP) is expected to include an approximate 2% headwind from acquisitions, divestitures and structural changes. — No Update

The company’s underlying effective tax rate (non-GAAP) is estimated to be 19.0%. This does not include the impact of ongoing tax litigation with the U.S. Internal Revenue Service, if the company were not to prevail. — Updated

The company expects to deliver comparable currency neutral EPS (non-GAAP) growth of 11% to 13%. — Updated

The company expects comparable EPS (non-GAAP) growth of 4% to 5%, versus $2.69 in 2023. — No Update

The company expects to generate free cash flow (non-GAAP) of approximately $9.2 billion through cash flow from operations of approximately $11.4 billion, less capital expenditures of approximately $2.2 billion. This does not include any potential payments related to ongoing tax litigation with the IRS. — No Update

Second Quarter 2024 Considerations — New

Comparable net revenues (non-GAAP) are expected to include an approximate 6% currency headwind based on the current rates and including the impact of hedged positions, in addition to an approximate 5% to 6% headwind from acquisitions, divestitures and structural changes.

Comparable EPS (non-GAAP) percentage growth is expected to include an approximate 8% to 9% currency headwind based on the current rates and including the impact of hedged positions, in addition to an approximate 2% headwind from acquisitions, divestitures and structural changes.

Notes

• All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period, unless otherwise noted.

• All references to volume and volume percentage changes indicate unit case volume, unless otherwise noted. All volume percentage changes are computed based on average daily sales, unless otherwise noted. “Unit case” means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings), with the exception of unit case equivalents for Costa non-ready-to-drink beverage products which are primarily measured in number of transactions. “Unit case volume” means the number of unit cases (or unit case equivalents) of company beverages directly or indirectly sold by the company and its bottling partners to customers or consumers.

• “Concentrate sales” represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in unit case equivalents) sold by, or used in finished beverages sold by, the company to its bottling partners or other customers. For Costa non-ready-to-drink beverage products, “concentrate sales” represents the amount of beverages, primarily measured in number of transactions (in all instances expressed in unit case equivalents) sold by the company to customers or consumers. In the reconciliation of reported net revenues, “concentrate sales” represents the percent change in net revenues attributable to the increase (decrease) in concentrate sales volume for the geographic operating segments and the Global Ventures operating segment after considering the impact of structural changes, if any. For the Bottling Investments operating segment, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any. The Bottling Investments operating segment reflects unit case volume growth for consolidated bottlers only.

• “Price/mix” represents the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred.

• First quarter 2024 financial results were impacted by one less day as compared to first quarter 2023, and fourth quarter 2024 financial results will be impacted by two additional days as compared to fourth quarter 2023. Unit case volume results for the quarters are not impacted by the variances in days due to the average daily sales computation referenced above.

Conference Call

The company is hosting a conference call with investors and analysts to discuss first quarter operating results today, April 30, 2024, at 8:30 a.m. ET. The company invites participants to listen to a live webcast of the conference call on the company’s website, http://www.coca-colacompany.com, in the “Investors” section. An audio replay in downloadable digital format and a transcript of the call will be available on the website within 24 hours following the call. Further, the “Investors” section of the website includes certain supplemental information and a reconciliation of non-GAAP financial measures to the company’s results as reported under GAAP, which may be used during the call when discussing financial results.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240430596387/en/

Investors and Analysts: Robin Halpern, koinvestorrelations@coca-cola.com

Media: Scott Leith, sleith@coca-cola.com

Source: The Coca-Cola Company

FAQ

What were Coca-Cola's net revenues in the first quarter of 2024?

Coca-Cola's net revenues grew 3% to $11.3 billion.

How much did Coca-Cola's EPS grow in the first quarter of 2024?

Coca-Cola's EPS grew 3% to $0.74, while comparable EPS (non-GAAP) grew 7% to $0.72.

What new product did Coca-Cola launch in the United States and Great Britain?

Coca-Cola launched Coca-Cola Happy Tears Zero Sugar, its first product sold exclusively on social media.

How did Coca-Cola expand its digital capabilities in the first quarter of 2024?

Coca-Cola leveraged digital tools to deepen relationships with consumers and customers, including scannable codes on packaging.

What challenges did Coca-Cola face in certain markets in the first quarter of 2024?

Coca-Cola faced challenges leading to declines in unit case volume in certain markets.

What was Coca-Cola's operating margin in the first quarter of 2024 compared to the prior year?

Coca-Cola's operating margin was 18.9% versus 30.7% in the prior year.