Coca-Cola (KO) maintained its momentum and delivered another sparkling quarter on Tuesday.
The soda giant beat Wall Street expectations in the second quarter, helped by global demand for its beverages despite rising prices. Revenue rose 3 percent to $12.4 billion, compared with expectations of $11.76 billion. Earnings per share rose 7 percent from a year ago to $0.84, compared with expectations of $0.81.
In a call with Yahoo Finance, CEO James Quincey said the results were the result of “strong execution of strategy.” As a result, the company is raising its 2024 guidance.
“We express confidence in our ability to deliver on the 2024 guidance… it’s really a demonstration of confidence in our long-term strategy to build brands and be able to work with our bottling partners to execute,” he said.
Overall, unit sales volume jumped 2%, while prices increased 9%. The company raised its full-year guidance and now expects organic revenue growth of 9% to 10%.
“You have to take into account a handful of countries that have very high inflation,” like Argentina, Quincey said. “They represent about half of the price composition.” He added that without that, dollar prices rose 4%.
He added that overall inflation in the US and Europe was running at around 3%, which was reflected in Coca-Cola’s figures.
“Inflation…is entering a kind of normalized space,” he said.
In the previous first quarter, Coca-Cola reported revenue of $11.3 billion, beating Wall Street estimates of $10.96 billion, while its earnings per share of $0.72 also beat expectations of $0.70.
As U.S. consumers remain cautious about where they spend their money, fast-food chains like McDonald’s (MCD), Burger King (QSR) and Taco Bell (YUM) are hoping to lure consumers with value and meal deals this summer.
Coca-Cola reportedly played a role in McDonald’s $5 meal program, which has now been extended through August. At the time, a spokesperson told Yahoo Finance, “We regularly partner with our customers on marketing programs to meet consumer needs.”
Quincey said the company continues to see that “lower-income consumers continue to be under pressure.”
“Wages are starting to outpace headline inflation, but interest rates are still relatively high, which allows them to save some money.”
Low-income consumers account for about 20% of Coca-Cola’s U.S. volumes, according to JPMorgan analyst Andrea Teixeira.
Consumers are frequenting chain restaurants less, looking for value-priced meals or shopping at grocery stores.
“It’s an ongoing effect. I don’t think it got particularly worse or better in the second quarter. I think that’s always a feature of what’s happening,” Quincey said.
Coca-Cola saw its sales volume decline by 1% in North America, while prices increased by 11%.
Since the beginning of the year, shares are up 8%, lagging…
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