Global Unit Case Volume Grew 2%
Net Revenues Grew 3%; Organic Revenues
(Non-GAAP) Grew 15%
Operating Income Grew 10%; Comparable Currency
Neutral Operating Income (Non-GAAP) Grew 18%
Operating Margin Was 21.3% Versus 20.1% in the
Prior Year; Comparable Operating Margin (Non-GAAP) Was 32.8% Versus
31.6% in the Prior Year
EPS Declined 5% to $0.56; Comparable EPS
(Non-GAAP) Grew 7% to $0.84
The Coca-Cola Company today reported second quarter 2024 results
that demonstrate continued momentum in an industry with many growth
opportunities. “We are encouraged with our second quarter results,
which delivered solid topline and operating income growth in an
ever-changing landscape,” said James Quincey, Chairman and CEO of
The Coca-Cola Company. “Together with our bottling partners, we
continue to execute our highly effective all-weather strategy, and
we are confident in our ability to deliver on our raised 2024
guidance and longer-term objectives.”
This press release features multimedia. View
the full release here:
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Highlights
Quarterly Performance
- Revenues: Net revenues grew 3% to $12.4 billion, and
organic revenues (non-GAAP) grew 15%. Revenue performance included
9% growth in price/mix and 6% growth in concentrate sales.
Concentrate sales were 4 points ahead of unit case volume,
primarily due to the timing of concentrate shipments.
- Operating margin: Operating margin, which includes items
impacting comparability, was 21.3% versus 20.1% in the prior year,
while comparable operating margin (non-GAAP) was 32.8% versus 31.6%
in the prior year. Operating margin expansion was primarily driven
by strong business performance and the impact of refranchising
bottling operations, partially offset by currency headwinds and an
increase in marketing investments.
- Earnings per share: EPS declined 5% to $0.56, while
comparable EPS (non-GAAP) grew 7% to $0.84. EPS performance
included the impact of an 11-point currency headwind, while
comparable EPS (non-GAAP) performance included the impact of a
10-point currency headwind.
- Market share: The company gained value share in total
nonalcoholic ready-to-drink (NARTD) beverages.
- Cash flow: Cash flow from operations was $4.1 billion, a
decrease of $516 million versus the prior year, largely due to
higher tax payments and cycling working capital benefits from the
prior year. Free cash flow (non-GAAP) was $3.3 billion, a decrease
of $693 million versus the prior year.
Company Updates
- Utilizing enhanced marketing capabilities to “Celebrate
Everyday Greatness”: The company has a 96-year relationship
with the Olympic Movement and is using its transformed marketing
approach to connect with fans around the world in advance of the
Olympic and Paralympic Games. The “Celebrate Everyday Greatness”
campaign focuses on five key brands and leverages a global toolkit
to tailor marketing locally. In France, the Olympic flame has been
celebrated through digital and live experiences during the Olympic
Torch Relay. Consumers engaged with AI-powered digital artwork,
creating personalized avatars to virtually accompany torchbearers.
The company connected with consumers through music, offering
in-person concerts in six cities along the relay route and so far
more than 750,000 beverage samples have been distributed via
recyclable mini cans and reusable cups. Millions of fans have also
tuned in to the concerts via live streaming, all powered by Coke
Studio. To share the magic of Paris 2024 with other regions, the
company collaborated with local artists to introduce new Trademark
Coca-Cola “hug cans” to celebrate the unity of fans and athletes.
By combining two hug cans, consumers unlock prizes and experiences
and can connect with others through social media. In the latest
evolution of the “Pause is Power™” campaign, Powerade launched a
globally integrated campaign in 30 markets that aspires to support
mental and physical well-being including social and experiential
activations featuring Team Powerade athletes. The company also
introduced a new flavor specially designed for the Olympic and
Paralympic Games, Powerade Gold, in 20 markets. The campaigns
contributed to Powerade® growing volume 6% during the quarter.
- Delivering value through elevated revenue growth management
(RGM) capabilities: The company has made significant progress
in optimizing its price-pack architecture, leveraging its RGM
advantage to create value for customers and consumers. In some
developed markets where consumers are seeking more affordable
offerings, the company is partnering with customers through
affordability activations to drive basket incidence and increase
retail sales. In India, the company is leveraging packaging
innovation by utilizing an ultra-lightweight affordable bottle with
an extended shelf life, allowing beverages to be transported
farther to reach more consumers and reducing costs. The package is
now available in over half of India’s commercial beverage outlets
and has added more than 400 million transactions in the first half
of the year. In Latin America, the company is piloting and scaling
its use of AI to quickly react to market changes, optimize pricing
decisions and adjust strategies to meet local business objectives,
driving revenue and volume growth across the system.
Operating Review – Three
Months Ended June 28, 2024
Revenues and
Volume
Percent Change
Concentrate
Sales1
Price/Mix
Currency
Impact
Acquisitions,
Divestitures
and Structural
Changes, Net
Reported Net
Revenues
Organic
Revenues2
Unit Case
Volume3
Consolidated
6
9
(6)
(5)
3
15
2
Europe, Middle East & Africa
5
24
(23)
0
7
30
0
Latin America
9
19
(9)
0
20
28
5
North America
(1)
11
0
0
10
10
(1)
Asia Pacific
7
(3)
(6)
(2)
(4)
4
3
Global Ventures4
3
(2)
0
0
0
1
3
Bottling Investments
7
7
(2)
(37)
(25)
14
(27)
Operating Income and
EPS
Percent Change
Reported
Operating
Income
Items Impacting
Comparability
Currency Impact
Comparable
Currency Neutral
Operating
Income2
Consolidated
10
3
(11)
18
Europe, Middle East & Africa
11
0
(22)
32
Latin America
15
5
(18)
28
North America
8
0
0
8
Asia Pacific
(4)
4
(6)
(2)
Global Ventures
19
0
1
19
Bottling Investments
(20)
2
(3)
(20)
Percent Change
Reported EPS
Items Impacting
Comparability
Currency Impact
Comparable
Currency Neutral
EPS2
Consolidated
(5)
(12)
(10)
17
Note: Certain rows may not add due to rounding.
1
For Bottling Investments, this represents
the percent change in net revenues attributable to the increase
(decrease) in unit case volume computed based on total sales
(rather than average daily sales) in each of the corresponding
periods after considering the impact of structural changes, if
any.
2
Organic revenues, comparable currency
neutral operating income and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3
Unit case volume is computed based on
average daily sales.
4
Due to the combination of multiple
business models in the Global Ventures operating segment, the
composition of concentrate sales and price/mix may fluctuate
materially from period to period. Therefore, the company places
greater focus on revenue growth as the best indicator of underlying
performance of the Global Ventures operating segment.
In addition to the data in the preceding tables, operating
results included the following:
Consolidated
- Unit case volume grew 2%. Developed markets were even, while
developing and emerging markets grew mid-single digits, driven by
growth in India, Brazil and the Philippines. Unit case volume
performance included the following:
- Sparkling soft drinks grew 3%, led by strong performance in
Asia Pacific and Latin America. Trademark Coca-Cola grew 2%, driven
by growth in Latin America and Asia Pacific. Coca-Cola Zero Sugar
grew 6%, driven by growth in all geographic operating segments.
Sparkling flavors grew 3%, driven by Asia Pacific.
- Juice, value-added dairy and plant-based beverages grew 2%, led
by North America and Asia Pacific.
- Water, sports, coffee and tea unit case volume was even. Water
declined 1%, as growth in Latin America and Europe, Middle East and
Africa was more than offset by declines in Asia Pacific and North
America. Sports drinks grew 3%, driven by Latin America, Europe,
Middle East and Africa, and Asia Pacific. Coffee declined 4%,
primarily due to the performance of Costa coffee in the United
Kingdom. Tea grew 1%, driven by growth in Asia Pacific and Europe,
Middle East and Africa.
- Price/mix grew 9%. Approximately 5 points were driven by
pricing from markets experiencing intense inflation, with the
remainder primarily driven by pricing actions in the marketplace.
Concentrate sales were 4 points ahead of unit case volume,
primarily due to the timing of concentrate shipments.
- Operating income grew 10%, which included items impacting
comparability and a 16-point currency headwind. Comparable currency
neutral operating income (non-GAAP) grew 18%, primarily driven by
organic revenue (non-GAAP) growth across all operating segments,
partially offset by an increase in marketing investments.
Europe, Middle East &
Africa
- Unit case volume was even, as growth in water, sports, coffee
and tea and sparkling flavors was offset by declines in Trademark
Coca-Cola and juice, value-added dairy and plant-based
beverages.
- Price/mix grew 24%. Approximately two-thirds was driven by
pricing from markets experiencing intense inflation, with the
remainder driven primarily by favorable mix and pricing actions
across operating units. Concentrate sales were 5 points ahead of
unit case volume, primarily due to the timing of concentrate
shipments.
- Operating income grew 11%, which included a 22-point currency
headwind. Comparable currency neutral operating income (non-GAAP)
grew 32%, primarily driven by strong organic revenue (non-GAAP)
growth, partially offset by higher operating expenses and an
increase in marketing investments.
- The company gained value share in total NARTD beverages, led by
share gains in Nigeria, Poland and Romania.
Latin America
- Unit case volume grew 5%, driven by growth in Trademark
Coca-Cola and water, sports, coffee and tea. Growth was led by
Mexico and Brazil.
- Price/mix grew 19%. Approximately two-thirds was driven by the
impact of inflationary pricing in Argentina, with the remainder
primarily driven by pricing actions in the marketplace. Concentrate
sales were 4 points ahead of unit case volume, primarily due to the
timing of concentrate shipments.
- Operating income grew 15%, which included items impacting
comparability and a 13-point currency headwind. Comparable currency
neutral operating income (non-GAAP) grew 28%, primarily driven by
strong organic revenue (non-GAAP) growth, partially offset by an
increase in marketing investments.
- The company lost value share in total NARTD beverages, as
growth in Colombia was more than offset by losses in Mexico and
Brazil.
North America
- Unit case volume declined 1%, as growth in juice, value-added
dairy and plant-based beverages was more than offset by declines in
water, sports, coffee and tea, Trademark Coca-Cola and sparkling
flavors.
- Price/mix grew 11%, driven by favorable mix and pricing actions
in the marketplace. Concentrate sales were in line with unit case
volume.
- Operating income and comparable currency neutral operating
income (non-GAAP) both grew 8%, primarily driven by organic revenue
(non-GAAP) growth, partially offset by an increase in marketing
investments and higher input costs.
- The company gained value share in total NARTD beverages, driven
by share gains in juice, value-added dairy and plant-based
beverages and Trademark Coca-Cola.
Asia Pacific
- Unit case volume grew 3%, driven by growth in sparkling flavors
and Trademark Coca-Cola. Growth was led by India and the
Philippines.
- Price/mix declined 3%, primarily driven by unfavorable mix,
partially offset by pricing actions in the marketplace. Concentrate
sales were 4 points ahead of unit case volume, primarily due to the
timing of concentrate shipments.
- Operating income declined 4%, which included items impacting
comparability and a 7-point currency headwind. Comparable currency
neutral operating income (non-GAAP) declined 2%, as organic revenue
(non-GAAP) growth was more than offset by an increase in marketing
investments and higher input costs.
- The company gained value share in total NARTD beverages, led by
share gains in the Philippines, Japan and South Korea.
Global Ventures
- Net revenues were even, and organic revenues (non-GAAP) grew
1%.
- Operating income grew 19%, which included a 1-point currency
tailwind. Comparable currency neutral operating income (non-GAAP)
grew 19%, driven by product mix.
Bottling Investments
- Unit case volume declined 27%, as growth in South Africa was
more than offset by the impact of refranchising bottling
operations.
- Price/mix grew 7%, driven by pricing actions across most
markets as well as favorable mix.
- Operating income declined 20%, which included items impacting
comparability, a 3-point currency headwind and the impact of
refranchising bottling operations. Comparable currency neutral
operating income (non-GAAP) also declined 20%.
Operating Review – Six Months
Ended June 28, 2024
Revenues and
Volume
Percent Change
Concentrate
Sales1
Price/Mix
Currency
Impact
Acquisitions,
Divestitures
and Structural
Changes, Net
Reported Net
Revenues
Organic
Revenues2
Unit Case
Volume3
Consolidated
2
11
(6)
(4)
3
13
2
Europe, Middle East & Africa
0
23
(21)
0
2
23
1
Latin America
4
21
(10)
0
15
25
4
North America
0
9
0
0
9
9
(1)
Asia Pacific
3
2
(5)
1
1
5
1
Global Ventures4
2
(2)
1
0
2
1
2
Bottling Investments
7
6
(3)
(26)
(16)
13
(17)
Operating Income and
EPS
Percent Change
Reported
Operating
Income
Items Impacting
Comparability
Currency Impact
Comparable
Currency Neutral
Operating
Income2
Consolidated
(17)
(23)
(10)
15
Europe, Middle East & Africa
3
1
(19)
21
Latin America
13
3
(13)
23
North America
(22)
(31)
0
9
Asia Pacific
5
4
(5)
6
Global Ventures
14
3
1
9
Bottling Investments
(3)
0
(3)
0
Percent Change
Reported EPS
Items Impacting
Comparability
Currency Impact
Comparable
Currency Neutral
EPS2
Consolidated
(1)
(8)
(9)
16
Note: Certain rows may not add due to
rounding.
1
For Bottling Investments, this represents
the percent change in net revenues attributable to the increase
(decrease) in unit case volume computed based on total sales
(rather than average daily sales) in each of the corresponding
periods after considering the impact of structural changes, if
any.
2
Organic revenues, comparable currency
neutral operating income and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3
Unit case volume is computed based on
average daily sales.
4
Due to the combination of multiple
business models in the Global Ventures operating segment, the
composition of concentrate sales and price/mix may fluctuate
materially from period to period. Therefore, the company places
greater focus on revenue growth as the best indicator of underlying
performance of the Global Ventures operating segment.
Outlook
The 2024 outlook information provided below includes
forward-looking non-GAAP financial measures, which management uses
in measuring performance. The company is not able to reconcile
full-year 2024 projected organic revenues (non-GAAP) to full-year
2024 projected reported net revenues, full-year 2024 projected
comparable net revenues (non-GAAP) to full-year 2024 projected
reported net revenues, full-year 2024 projected underlying
effective tax rate (non-GAAP) to full-year 2024 projected reported
effective tax rate, full-year 2024 projected comparable currency
neutral EPS (non-GAAP) to full-year 2024 projected reported EPS, or
full-year 2024 projected comparable EPS (non-GAAP) to full-year
2024 projected reported EPS without unreasonable efforts because it
is not possible to predict with a reasonable degree of certainty
the exact timing and exact impact of acquisitions, divestitures and
structural changes throughout 2024; the exact timing and exact
amount of items impacting comparability throughout 2024; and the
exact impact of fluctuations in foreign currency exchange rates
throughout 2024. The unavailable information could have a
significant impact on the company’s full-year 2024 reported
financial results.
Full Year 2024
The company expects to deliver organic revenue (non-GAAP) growth
of 9% to 10%, which consists of operating performance at the high
end of the company’s long-term growth model and the anticipated
pricing impact of a number of markets experiencing intense
inflation. — Updated
For comparable net revenues (non-GAAP), the company expects a 5%
to 6% currency headwind based on the current rates and including
the impact of hedged positions. Comparable EPS (non-GAAP)
percentage growth is expected to include an 8% to 9% currency
headwind based on the current rates and including the impact of
hedged positions. The majority of currency headwinds are due to
currency devaluation resulting from intense inflation. —
Updated
For comparable net revenues (non-GAAP), the company expects a 4%
to 5% headwind from acquisitions, divestitures and structural
changes. Comparable EPS (non-GAAP) is expected to include a 1% to
2% headwind from acquisitions, divestitures and structural changes.
— Updated
The company’s underlying effective tax rate (non-GAAP) is
estimated to be 19.0%. This does not include the impact of ongoing
tax litigation with the U.S. Internal Revenue Service, if the
company were not to prevail. — No Update
The company expects to deliver comparable currency neutral EPS
(non-GAAP) growth of 13% to 15%. — Updated
The company expects comparable EPS (non-GAAP) growth of 5% to
6%, versus $2.69 in 2023. — Updated
The company expects to generate free cash flow (non-GAAP) of
approximately $9.2 billion through cash flow from operations of
approximately $11.4 billion, less capital expenditures of
approximately $2.2 billion. This does not include any potential
payments related to ongoing tax litigation with the IRS. — No
Update
Third Quarter 2024
Considerations — New
Comparable net revenues (non-GAAP) are expected to include an
approximate 4% currency headwind based on the current rates and
including the impact of hedged positions, in addition to a 4% to 5%
headwind from acquisitions, divestitures and structural
changes.
Comparable EPS (non-GAAP) percentage growth is expected to
include an approximate 8% currency headwind based on the current
rates and including the impact of hedged positions, in addition to
a 1% to 2% headwind from acquisitions, divestitures and structural
changes.
Notes
- All references to growth rate percentages and share compare the
results of the period to those of the prior year comparable period,
unless otherwise noted.
- All references to volume and volume percentage changes indicate
unit case volume, unless otherwise noted. All volume percentage
changes are computed based on average daily sales, unless otherwise
noted. “Unit case” means a unit of measurement equal to 192 U.S.
fluid ounces of finished beverage (24 eight-ounce servings), with
the exception of unit case equivalents for Costa non-ready-to-drink
beverage products which are primarily measured in number of
transactions. “Unit case volume” means the number of unit cases (or
unit case equivalents) of company beverages directly or indirectly
sold by the company and its bottling partners to customers or
consumers.
- “Concentrate sales” represents the amount of concentrates,
syrups, beverage bases, source waters and powders/minerals (in all
instances expressed in unit case equivalents) sold by, or used in
finished beverages sold by, the company to its bottling partners or
other customers. For Costa non-ready-to-drink beverage products,
“concentrate sales” represents the amount of beverages, primarily
measured in number of transactions (in all instances expressed in
unit case equivalents) sold by the company to customers or
consumers. In the reconciliation of reported net revenues,
“concentrate sales” represents the percent change in net revenues
attributable to the increase (decrease) in concentrate sales volume
for the geographic operating segments and the Global Ventures
operating segment after considering the impact of structural
changes, if any. For the Bottling Investments operating segment,
this represents the percent change in net revenues attributable to
the increase (decrease) in unit case volume computed based on total
sales (rather than average daily sales) in each of the
corresponding periods after considering the impact of structural
changes, if any. The Bottling Investments operating segment
reflects unit case volume growth for consolidated bottlers
only.
- “Price/mix” represents the change in net operating revenues
caused by factors such as price changes, the mix of products and
packages sold, and the mix of channels and geographic territories
where the sales occurred.
- First quarter 2024 financial results were impacted by one less
day as compared to first quarter 2023, and fourth quarter 2024
financial results will be impacted by two additional days as
compared to fourth quarter 2023. Unit case volume results for the
quarters are not impacted by the variances in days due to the
average daily sales computation referenced above.
Conference Call
The company is hosting a conference call with investors and
analysts to discuss second quarter operating results today, July
23, 2024, at 8:30 a.m. ET. The company invites participants to
listen to a live webcast of the conference call on the company’s
website, http://www.coca-colacompany.com, in the “Investors”
section. An audio replay in downloadable digital format and a
transcript of the call will be available on the website within 24
hours following the call. Further, the “Investors” section of the
website includes certain supplemental information and a
reconciliation of non-GAAP financial measures to the company’s
results as reported under GAAP, which may be used during the call
when discussing financial results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240723518712/en/
Investors and Analysts: Robin
Halpern, koinvestorrelations@coca-cola.com Media: Scott Leith, sleith@coca-cola.com
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