Coca-Cola on Tuesday reported quarterly revenue that beat analysts’ expectations, driven by higher prices on its drinks.
But those higher prices have hurt demand for Coke products like Simply Orange Juice and Fairlife Milk. Coke said its unit case volume, which strips out the impact of currency and price changes, fell 1% in its fourth quarter.
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Shares of the company were flat Tuesday.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 45 cents adjusted vs. 45 cents expected
- Revenue: $10.13 billion vs. $10.02 billion expected
The beverage giant reported fourth-quarter net income attributable to the company of $2.03 billion, or 47 cents per share, down from $2.41 billion, or 56 cents per share, a year earlier.
Excluding an impairment charge tied to its Russian business and other items, Coke earned 45 cents per share.
Net sales rose 7% to $10.13 billion, driven by 12% growth in pricing and a more expensive mix of drinks sold.
Unit case volume was flat in North America and slipped 5% in its Europe, Middle East and Africa segment. CEO James Quincey said last quarter that European consumers were changing their behavior in response to soaring inflation.
“It looks like the European economy is going to avoid a technical recession, but clearly consumer demand is softening, and I think that’s likely to continue into the rest of the year,” he said on Tuesday.
He added that Coca-Cola’s U.S. business is still performing well and the reopening of China will likely boost sales this year.
The Atlanta-based company has been using a two-pronged strategy to appeal to a wide range of consumers. In addition to raising prices, it’s also been trying to offer more affordable options targeted at lower-income customers. Quincey also said that the company has to “earn the right to take price.”
Both Coke’s sparkling soft drinks segment and its water, sports, coffee and tea division reported flat volume for the quarter, although there were some bright spots. Coke Zero Sugar’s volume climbed 9%, and its coffee business saw volume increase 11% as the company expanded its Costa brand.
The weakest spot was Coke’s juice, value-added dairy and plant-based beverages segment, which saw its volume shrink 7% in the quarter. The company said the suspension of its Russian business weighed on the division.
For 2023, Coke projects comparable revenue growth of 3% to 5% and comparable earnings per share growth of 4% to 5%. Wall Street was forecasting revenue growth of 3.9% and earnings per share growth of 3% for the year.
“Inflation is likely to moderate as we go through the year, and therefore we expect the rate in which prices are going to increase will start to moderate and become more normal by the end of the year,” James said on CNBC’s “Squawk Box” on Tuesday.
Read the Coca-Cola earnings report here.