Coca-Cola beats first-quarter earnings estimates, raises annual revenue outlook

By James Rogers

CEO touts strong start to the year amid a 'dynamic backdrop'

Coca-Cola Co. reported better-than-expected first-quarter results before market open Tuesday, boosted by what the beverage giant described as "a dynamic backdrop."

For the first quarter, net income was $3.177 billion, or 74 cents a share, up from $3.107 billion, or 72 cents a share, in the same period last year. Excluding nonrecurring items, adjusted earnings of 72 cents a share beat the FactSet consensus of 70 cents. Revenue grew 3% to reach $11.3 billion, beating the FactSet consensus of $11.007 billion as price and mix grew 13%, although concentrate sales declined 2%. Coca-Cola (KO) said 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. Global unit case volume grew 1%.

"We're encouraged by our start to 2024, delivering another quarter of volume, topline and earnings growth amidst a dynamic backdrop," Coca-Cola CEO James Quincey said in a statement.

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"The U.S. consumer remains in good shape," Quincey said during a conference call to discuss the results. However, "There is some purchasing-power compression in the lower-income echelons."

Similar to the U.S., Coca-Cola is seeing an improved macro environment in Europe, while lower-income consumers are "under pressure," according to Quincey. "It's not too dissimilar a story compared to the U.S.," he said.

Coca-Cola also updated its guidance and now expects full-year organic revenue growth of 8% to 9%, at the high end of the company's long-term growth model. Previously, Coca-Cola had forecast 2024 organic revenue growth of 6% to 7%.

Related: Coca-Cola raises dividend, to boost yield to about 3.3%

This reflects the anticipated pricing impact of a number of markets experiencing intense inflation, the company said. For comparable net revenue, the company now expects a 4% to 5% currency headwind based on the current rates and including the impact of hedged positions. Comparable EPS percentage growth is expected to include a 7% to 8% currency headwind. The majority of currency headwinds are due to currency devaluation resulting from intense inflation, according to Coca-Cola.

For the second quarter, Coca-Cola's comparable net revenue is now expected to include an approximate 6% currency headwind based oncurrent rates and including the impact of hedged positions, in addition to an approximate 5% to 6% headwind from acquisitions, divestitures and structural changes.

The company's shares ended Tuesday's session down 0.4%. Coca-Cola's stock is up 4.8% in 2024, compared with the S&P 500 index's SPX gain of 5.6%.

-James Rogers

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04-30-24 1706ET

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