Coca-Cola surpassed Wall Street expectations for fourth-quarter revenue today as it benefits from higher product prices and strong demand for its products.
Despite the company raising prices over the last few quarters, consumers dining out and indulging in experiences such as films and sports have been willing to spend more on snacks and drinks.
PepsiCo
This is in contrast to its rival PepsiCo, which last week reported a decline in sales for the first time in 14 quarters.
This came after PepsiCo raised prices to protect its margins post-pandemic, leading to a 4% drop in volumes.
But for Coca-Cola, unit case volumes rose 2% and average selling prices increased 9% in the fourth quarter.
Coca-Cola still forecast weak growth in organic revenue based on concerns that benefits from price hikes will soon begin to fade.
The company expects organic revenue growth for the 2024 financial year at 6% to 7%. This is about half of the 12% rise seen in 2023.
In a post-earnings call, chief executive James Quincey noted that inflation is moderating in North America and Europe.
“The cumulative impact of inflation is pressuring certain consumer segments who are seeking value,” Quincey said.
‘Really Strong’
Despite challenges, Wedbush analyst Gerald Pascarelli said the drink maker’s organic revenue forecast is “really strong”, especially compared to PepsiCo.
Coca-Cola sees annual adjusted profit to be between 4% and 5%, compared to the London Stock Exchange Group’s estimates of a 4.5% growth.
Its net revenue rose 7.4% to $10.95 billion, beating expectations of $10.68 billion.
"Coca-Cola's results were much better than PepsiCo's, as Coke continues to benefit from being able to pass on price increases," said Dave Wagner, portfolio manager at Aptus Capital Advisors, which holds shares in PepsiCo.
Coca-Cola’s shares were up about 1% in early trading.
