Key takeaways from Coca-Cola’s earnings report

Coca-Cola Company (NYSE:KO) moved higher in early trading on Wednesday after edging past organic sales estimates with its Q3 earnings report and setting solid guidance. Revenue dipped 0.8% year-over-year to $11.9 billion for the quarter that ended on September 27, while EPS slotted in at $0.77 vs. $0.75 consensus. “Our business continues to demonstrate resilience in the face of a dynamic external environment,” stated CEO James Quincey.

Organic sales shine again

Organic revenue was up 9% during the quarter vs. +6.3% consensus estimate, led by gains in the Latin America (+24%), and North America (+12%). The organic sales growth mark was notably higher than PepsiCo’s (PEP) 1.3% mark for a roughly overlapping period. Unit case volume was down 1% for Coca-Cola (KO) during the quarter. Growth led by Brazil, the Philippines and Japan was more than offset by declines in China, Mexico and Türkiye. Price/mix accounted for ten percentage points of growth. Approximately 4 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 1 point behind unit case volume, primarily due to the timing of concentrate shipments.

North America outperforms

Unit case volume in North America was even as growth in Trademark Coca-Cola, juice, value-added dairy and plant-based beverages and sparkling flavors was offset by a decline in water, sports, coffee and tea. Price/mix grew 11%, driven by favorable 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 in North America grew 10%, which included items impacting comparability. Comparable currency neutral operating income grew 16%, primarily driven by strong organic revenue growth, partially offset by higher input costs and an increase in marketing investments.

Margins march higher

Consolidate comparable operating margin (non-GAAP) was 30.7% versus 29.7% in the prior year. The operating margin improvement was primarily driven by strong organic revenue growth and the impact of refranchising bottling operations, partially offset by currency headwinds. Comparable operating margin expansion was primarily driven by strong organic revenue (non-GAAP) growth and the impact of refranchising bottling operations, partially offset by currency headwinds.

Looking ahead

Looking ahead, Coca-Cola (KO) sees full-year adjusted organic revenue growth of +10% vs. +9.9% consensus. The company expects to deliver comparable currency neutral EPS (non-GAAP) growth of 14% to 15%. Shares of Coca-Cola (KO) moved 0.85% higher in premarket action, while PepsiCo (PEP) slipped 0.15%.