Coca-Cola beats earnings expectations despite sluggish demand, shares fall 2%

Atlanta: Coca-Cola, the giant beverage brand has reported better-than-expected earnings and revenue for the third quarter, driven by price increases that offset declining demand. Despite the strong financial performance, the company's shares dropped by 2 percent in premarket trading.

According to reports on CNBC, Coca-Cola reported earnings per share of 77 cents, adjusted, surpassing analysts' expectations of 74 cents, based on a survey by LSEG. Adjusted revenue came in at 11.95 billion dollars, also above the expected 11.60 billion dollars.

However, net income attributable to shareholders fell to 2.85 billion dollars, or 66 cents per share, down from 3.09 billion dollars, or 71 cents per share, in the same quarter last year. Adjusted net sales remained flat year-over-year, but Coca-Cola's organic revenue, which excludes acquisitions, divestitures, and currency effects, rose by 9 percent.

Coca-Cola Faces Global Volume Challenges as International Demand Weakens

The company faced challenges with unit case volume, which declined by 1 percent overall due to weaker demand in some international markets. North America's volume remained flat, as declines in water, sports drinks, coffee, and tea were offset by growth in Coca-Cola’s core soda products, juices, and plant-based beverages. Volumes fell by 2 percent in the Europe, Middle East, and Africa (EMEA) region and the Asia-Pacific region, with notable drops in China and Turkey. Latin America also reported flat volume.

Globally, Coca-Cola's sparkling soft drinks, including Sprite and its flagship soda, maintained flat volumes, while its juice, dairy, and plant-based beverages division saw a 3 volume decline. The water, sports drinks, coffee, and tea segment experienced a 4 percent drop, driven by a 6 percent decline in bottled water.
Coca-Cola raised its prices by 10 percent, with approximately 4 percent of the increase stemming from inflation in markets like Argentina. The rest came from price hikes and consumers opting for more premium products.

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Looking ahead, Coca-Cola expects organic revenue growth of around 10 percent for 2024, at the upper end of its previous range of 9 percent to 10 percent. The company maintained its forecast for a 5 percent to 6 percent increase in comparable earnings per share. However, Coca-Cola anticipates that currency fluctuations will negatively impact its results in 2025, projecting a low-single-digit hit to revenue and a mid-single-digit hit to earnings per share.