COCA-Cola raised its annual organic sales forecast on Tuesday (Apr 30) after beating first-quarter revenue and profit expectations as customers shell out more money for its pricey sodas and juices globally.
The soda giant is seeing demand in the US surge mainly in the away-from-home category as consumers venturing out for movies and dining are willing to spend on its higher-priced sodas and juices.
Both Coca-Cola and PepsiCo are also enjoying buoyant demand in international markets such as Europe and Latin America where relaunches of Georgia Coffee and Sprite reformulations have helped bump up sales.
Coca-Cola’s organic revenue in Europe, Middle East and Africa rose 15 per cent in the first quarter, while in North America it increased 7 per cent.
The company’s overall average selling price rose 13 per cent, while unit case volumes were up only 1 per cent.
“They are doing good in certain international markets, which are a little bit more used to the effects of inflation, and Coca-Cola has frankly a lot of brand power so they are not seeing that kind of erosion,” said Christian Greiner, senior portfolio manager at F/m Investments, which owns shares of the beverage giant.
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Coca-Cola is also heavily promoting, overhauling their existing products and introducing newer items to spur demand among lower-income customers.
The company expects fiscal 2024 organic sales to grow 8 to 9 per cent, compared with its prior forecast of a 6 to 7 per cent rise.
Coca-Cola’s first-quarter net revenue rose 2.5 per cent to US$11.23 billion, beating LSEG estimates of US$11.01 billion. On an adjusted basis, the company earned 72 cents per share, compared with expectations of 70 cents.
The company maintained its annual comparable earnings per share forecast of 4 to 5 per cent growth.
“It is encouraging to see the company guide up but on an underlying US dollar basis, it looks like everything is going to remain the same,” Wedbush analyst Gerald Pascarelli said. REUTERS
