Coca-Cola outlines 5%–6% organic revenue growth and 8% EPS growth for 2025 amid evolving global markets

Earnings Call Insights: The Coca-Cola Company (KO) Q2 2025

Management View

CEO James Quincey emphasized the company’s adaptability in the evolving external environment, stating, “After the first half of this year, we’re on track to deliver on both our top line and updated bottom line guidance. We’re confident we can navigate varying local market dynamics during the remainder of 2025 to deliver on our updated guidance.” He highlighted 5% organic revenue growth and robust margin expansion, with value share gains for the 17th consecutive quarter.
Quincey noted sequential volume improvements in the U.S. and Europe and pointed out strong performance in brands such as Coca-Cola Zero Sugar, Diet Coke, Fanta, fairlife, BODYARMOR, and Powerade, which grew volume. He also described the effectiveness of granular action plans, including targeted advertising and affordability initiatives.
In Latin America, Quincey reported improved performance in Argentina and volume growth for Coca-Cola Zero Sugar in Brazil and Mexico, despite weather challenges and macroeconomic pressures. In EMEA, all three operating units grew volume, with notable campaigns like Share a Coke and Sprite spicy meals. Africa delivered volume growth in challenging conditions, and Asia Pacific showed mixed results with volume declines but revenue and operating income growth.
Quincey discussed innovations such as the launch of Sprite + Tea in North America and announced an upcoming expansion of trademark Coca-Cola products with U.S. cane sugar. He also outlined the scaling of an AI-based pack price optimization tool to eight markets.
CFO John Murphy stated, “We grew organic revenues 5%. Unit cases declined 1%, largely due to a weaker-than-expected June… Our price/mix growth of 6% was primarily driven by approximately 5 points of pricing actions and 1 point of favorable mix.” Murphy highlighted margin expansion, with comparable gross margin up 80 basis points and operating margin up 190 basis points. He reported Q2 comparable EPS of $0.87, up 4% year-over-year, and free cash flow (excluding fairlife contingent consideration) of $3.9 billion. Murphy confirmed net debt leverage at 2x EBITDA, at the low end of the targeted range.

Outlook

Murphy stated, “We continue to expect organic revenue growth of 5% to 6%, but now expect comparable currency-neutral earnings per share growth of approximately 8%.” The company anticipates a 1 to 2-point currency headwind to net revenues and a 5-point headwind to comparable EPS for 2025. The underlying effective tax rate for 2025 is projected at 20.8%. Murphy added, “We now expect 2025 comparable earnings per share growth of approximately 3% versus $2.88 in 2024.”
The company no longer expects margins to be back half weighted in 2025, reflecting strong early-year expansion. Recovery in some markets is expected to take time, with concentrate sales anticipated to run slightly behind unit cases in Q3.

Financial Results

Organic revenues grew 5%. Unit cases declined 1%. Price/mix increased 6%, with 5 points from pricing and 1 point from favorable mix. Comparable gross margin rose 80 basis points; operating margin increased 190 basis points. Q2 comparable EPS was $0.87, a 4% year-over-year rise. Free cash flow (excluding fairlife contingent consideration) reached $3.9 billion. The company made a final $1.2 billion transition tax payment related to the 2017 Tax Cuts and Jobs Act.

Q&A

Lauren Lieberman, Barclays: Asked for clarification on “pivoting plans.” Quincey responded, “This year has been, I think, characterized by rapid turns of events and twists and turns, which has required us to respond with greater agility and speed… it’s really about the need for the all-weather strategy to be taken up another notch in terms of how fast you can pivot and execute.”
Dara Mohsenian, Morgan Stanley: Inquired about fairlife capacity and international expansion. Quincey confirmed continued strong growth and that new U.S. capacity will come online in early 2026, with international expansion in consideration but complex.
Stephen Robert Powers, Deutsche Bank: Asked about rebound expectations in Mexico and India. Quincey stated, “We’ve got some strong plans to take Mexico… On affordability, doubling down on refillables and some of the value offerings.” For India, Quincey expressed confidence in marketing campaigns and refranchising with the Jubilant group.
Filippo Falorni, Citi: Sought outlook on North America, QSR, and Hispanic consumers. Quincey noted, “By the end of June, we had basically got back to the share we started the year with” among Hispanic consumers and described resilience in the U.S. business.
Bonnie Herzog, Goldman Sachs: Asked about productivity upside. Quincey cited marketing transformation and disciplined operating expense management for faster-than-anticipated savings.
Chris Carey, Wells Fargo: Questioned North America margin drivers. Quincey pointed to productivity initiatives and business mix, emphasizing continued investment in brands.
Kaumil Gajrawala, Jefferies: Asked about operating leverage and currency. Murphy detailed hedging strategies and a softening negative currency impact.
Robert Ottenstein, Evercore: Probed global consumer strength. Quincey observed resilience overall, with surprise weakness in ASEAN markets but continued confidence in recovery programs.

Sentiment Analysis

Analysts focused on clarifying strategy pivots, margin sustainability, and category-specific outlooks, with a generally neutral to slightly positive tone, seeking detail on growth levers and risk management.
Management maintained a confident and optimistic tone, particularly during prepared remarks, using phrases like “we’re confident” and “we remain steadfastly focused.” During Q&A, the tone remained constructive and detailed, with a focus on adaptation and agility.
Compared to the prior quarter, both analysts and management maintained a similar sentiment, with management demonstrating increased agility and analysts continuing to probe on risks and execution.

Quarter-over-Quarter Comparison

Guidance for comparable currency-neutral EPS growth increased to approximately 8% from the prior quarter’s 7%–9% range. The company now expects a 1–2 point currency headwind to net revenues (improved from 2–3 points previously) and a 5-point headwind to EPS (from 5–6 points). Margin expansion came earlier than anticipated, shifting away from expectations of back half weighting. Volume trends decelerated in Q2, while Q1 saw volume growth. Strategic focus shifted to even greater agility and market-specific pivots. Analysts continued to focus on execution, margin sustainability, and recovery in key markets.
Management’s confidence and focus on agility increased compared to the previous quarter, with greater emphasis on tactical pivots and strategic execution.

Risks and Concerns

Management cited ongoing external volatility, currency headwinds, and uneven consumer pressure in certain markets. Volume declines were noted, particularly due to adverse weather and pockets of consumer weakness. Capacity constraints in fairlife were acknowledged, with new U.S. capacity coming online in 2026. Asia Pacific, especially ASEAN, saw weaker volume trends, and recovery in Mexico and India is subject to macro and weather risks. Murphy noted, “We continue to expect our external landscape to be dynamic, and we expect recovery in some markets to take time.”

Final Takeaway

The company communicated confidence in achieving its updated 2025 guidance, targeting 5%–6% organic revenue growth and approximately 8% comparable currency-neutral EPS growth despite ongoing market volatility and volume headwinds in select geographies. Management highlighted its ability to pivot rapidly, invest in marketing and innovation, and leverage its global-local execution model in response to evolving consumer and macroeconomic conditions.

Read the full Earnings Call Transcript