For the full year, Coke is now projecting comparable earnings per share growth of 8% to 9%, up from its prior forecast of 7% to 8%, thanks to lower effective tax rates.
And despite uncertainty over the U.S.-Iran war and its ramifications for the broader economy, the company reiterated its previous outlook of organic revenue growth of 4% to 5%.
“During the quarter, the external environment differed greatly across our markets,” CEO Henrique Braun said on the company’s conference call. “While many consumers remained resilient, others are under pressure due to persistent inflation, greater macroeconomic uncertainty and volatilities driven by the conflict in the Middle East.”
Shares of the company rose 5% in morning trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 86 cents adjusted vs. 81 cents expected
- Revenue: $12.47 billion adjusted vs. $12.24 billion expected
Coke reported first-quarter net income attributable to shareholders of $3.92 billion, or 91 cents per share, up from $3.33 billion, or 77 cents per share, a year earlier.
Excluding impairment charges and other items, the beverage giant earned 86 cents per share.
The company’s adjusted net sales climbed 12% to $12.47 billion. Coke’s organic revenue, which strips out acquisitions, divestitures and currency, rose 10% in the quarter.
The company’s unit case volume increased 3% globally. The metric excludes pricing to reflect demand more accurately.
In the past few quarters, Coke executives have reported weaker demand from lower-income consumers. However, premium brands like Fairlife and Smartwater have stayed strong in the current K-shaped economy, boosted by high-income shoppers who aren’t feeling the same pinch as low-income consumers.
Coke has also been trying to offer more affordable options for budget-conscious shoppers, Braun said on Tuesday’s call.
All of Coke’s operating segments reported volume growth for the quarter, including its home market. The company’s volume in North America increased 4%.
Across the portfolio, Coke’s water, sports, coffee and tea segment reported the strongest global growth. The division saw volume rise 5%, fueled by stronger demand for its tea and bottled water.
The sparkling soft drinks division reported that volume increased 2%, fueled by a 13% jump for Coca-Cola Zero Sugar.
The laggard of the portfolio this quarter was Coke’s juice, value-added dairy and plant-based beverage segment, which reported a volume decline of 1%. Growth in Fairlife and Santa Clara, a Mexican dairy brand, was not enough to offset the sale of the company’s finished product operations in Nigeria last year.
Looking ahead to the rest of the year, Coke executives expressed confidence that they would be able to weather the uncertainty caused by the war between the U.S. and Iran.
“Notwithstanding volatility in certain commodities, like tea and coffee, we believe the overall impact on our cost basket is manageable at this time,” CFO John Murphy said, adding that the outlook may change as the geopolitical situation progresses.
The company has less exposure to higher aluminum and plastic prices than its bottling partners. However, sales in the Middle East did weaken in March after the conflict began, executives said.
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