Coca-Cola (KO, Financial) has once again outperformed analysts' expectations in the first quarter, reporting positive growth in volume and an uplift in its FY24 organic revenue forecast. Despite this achievement aligning closely with market anticipations and thus only leading to modest stock gains today, KO's shares have seen a steady rise, recently surpassing the $61.00 resistance level. This is particularly noteworthy as KO continues to outperform its main rival, PepsiCo (PEP, Financial), in quarterly comparisons.
Key highlights from Coca-Cola's Q1 performance include:
- Adjusted earnings of $0.72 per share, marking a 5.9% year-over-year increase, with revenue growing 2.7% to $11.3 billion.
- Organic revenue growth of 11%, after adjusting for foreign exchange and mergers & acquisitions effects.
- A 1% increase in global unit case volume, with North America's volume remaining stable.
- Operating margins improved by 60 basis points year-over-year to 32.4%, benefiting from the company's bottling re-franchising strategy.
Coca-Cola's pricing strategy has effectively countered inflationary pressures, notably in Latin America and EMEA, where prices surged by 22%, yet volume growth persisted. North America saw a 6% price increase but maintained its volume, outperforming PEP's 5% volume decline in the region. The company anticipates continued positive momentum into Q2, despite facing challenges such as currency fluctuations and geopolitical issues.
Coca-Cola's resilience in emerging markets, despite hyperinflation, underscores management's confidence in maintaining growth through strategic pricing. The company has maintained its FY24 adjusted EPS forecast at $2.80-2.82 and increased its organic sales growth projection to 8-9%. Coca-Cola's enduring brand loyalty, evident in its ability to raise prices without losing consumer interest, sets it apart from competitors like PEP and Keurig Dr Pepper (KDP, Financial), positioning it favorably for 2024.
