Coca-Cola bested Wall Street projections on Tuesday, announcing a stronger-than-expected fourth quarter with solid performance from a range of operations around the world.
The Atlanta-based beverage giant reported revenues of $10.8 billion for its fourth fiscal quarter and growth of 7% from the same period a year earlier. Officials predicted similar expansion for this year.
Through currency “headwinds” and ebbing, yet persistent, inflation, the company has managed to snare more market share than competitors, said James Quincey, company chief executive officer, during a teleconference Tuesday with analysts and reporters. “We are not just the leaders, we are the share-winners.”
Coca-Cola revenues grew 6% during the past year to $45.8 billion, slower than the previous year’s 12% expansion. Officials on Tuesday forecast growth this year will between 6% and 7%.
While inflation has fallen, “the cumulative impact” is still a problem for consumers of discretionary products, Quincey said. “In North America and Europe, while inflation is moderating, the cumulative impact of inflation is pressuring certain consumer segments who are seeking value.”
While many customers last year saw pay outpace inflation, many consumers became more choosy. That was reflected in the volume of Coca-Cola products sold last year, up just 2%.
Yet Coca-Cola found ways — sometimes through smaller, lower-priced packages — to keep cash-strapped customers buying, said Duane Stanford, editor and publisher of Beverage Digest, which tracks the industry. “What they are trying to get across to Wall Street is that they still have pricing power, even though the volume being sold is flattish.”
The company is adept at handling many product lines across multiple markets, so it didn’t need a spurt in sales from any one offering to have a good quarter, he said. “There really wasn’t one thing. They are so global and in so many markets and they can manage all that and hit their numbers.”
The Coca-Cola earnings contrasted with those of archrival Pepsi.
The New York-based company last week announced a decline in sales for the first time in more than three years. Pepsi’s earnings beat expectations for the fourth fiscal quarter, but revenues dipped 0.5% as officials blamed inflation.
Pepsi stock lost about $6 a share after that announcement. Shares were trading at $168 midday Tuesday, compared to its 52-week high above $196 in May.
Coca-Cola stock opened at $59.55 a share Tuesday and jumped nearly $1 in early trading after the earnings announcement, but then dropped as the day went on. Shares were down below $59 by midday, their lowest point since January 24.
Over the past year, shares of Coca-Cola hit their high in May, cresting at $64.30. The lowest point came in October, when they dipped to $52.38 a share.
That dip reflected the cautious response of some Wall Street analysts to Coca-Cola’s earnings report.
CFRA Coca-Cola reports better-than-expected sales, predicts solid 2024, which had been recommending Coca-Cola as a “strong buy,” lowered its opinion one notch to “buy” — still optimistic, but less enthusiastic, said Garrett Nelson, vice president and senior equity analyst.
Sales were so good it was easy to forget that profit margins were tighter, he said. “Stronger-than-expected revenue offset weaker-than-forecasted margins.”
He dropped his 12-month target for Coca-Cola stock from $68 to $66.
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