KO
Coca Cola CO
NYSE
8-K: Coca-Cola Reports Mixed Q1 2025 Results: Organic Revenue Up, Net Revenue Down Amid Currency Headwinds
Sentiment:
Quarterly Report
29 April 2025 6:58 AM
Coca-Cola's first quarter 2025 results show a 2% decline in net revenues but a 6% increase in organic revenues, driven by price/mix growth and global unit case volume increases.
Worse than expected
Net revenues declined 2% due to currency headwinds and refranchising, indicating worse performance than expected.
Free cash flow was negative $5.5 billion due to a large contingent consideration payment, indicating worse performance than expected.
Summary
- The Coca-Cola Company reported its first quarter 2025 financial results.
- Net revenues decreased by 2% to $11.1 billion, influenced by currency headwinds and the impact of refranchising bottling operations.
- However, organic revenues (non-GAAP) increased by 6%, including a 5% growth in price/mix and a 1% increase in concentrate sales.
- Global unit case volume grew by 2%, led by growth in India, China, and Brazil.
- Operating income increased significantly by 71%, while comparable currency neutral operating income (non-GAAP) grew by 10%.
- EPS grew 5% to $0.77, while comparable EPS (non-GAAP) grew 1% to $0.73, both impacted by currency headwinds.
- Cash flow used in operations was $5.2 billion, resulting in negative free cash flow of approximately $5.5 billion due to a $6.1 billion contingent consideration payment for the acquisition of fairlife, LLC in 2020.
- Excluding the fairlife payment, free cash flow was $558 million.
- The company gained value share in total nonalcoholic ready-to-drink (NARTD) beverages.
Sentiment
Score: 6
Explanation: The sentiment is neutral to slightly positive. While there are positive aspects like organic revenue growth and operating income increase, the negative free cash flow and currency headwinds temper the overall outlook.
Positives
- Organic revenues grew by 6%, indicating strong underlying business performance.
- Global unit case volume increased by 2%, showing growth in key markets like India, China, and Brazil.
- Operating income saw a substantial increase of 71%.
- The company gained value share in the total nonalcoholic ready-to-drink (NARTD) beverage market.
- Comparable currency neutral operating income (non-GAAP) grew by 10%.
Negatives
- Net revenues declined by 2% due to currency headwinds and refranchising impacts.
- Free cash flow was negative $5.5 billion due to a large contingent consideration payment.
- EPS growth was limited to 5% (1% on a comparable basis) due to currency headwinds.
- Concentrate sales were 1 point behind unit case volume, primarily due to two fewer days in the quarter.
Risks
- Currency headwinds continue to negatively impact reported revenues and earnings.
- The company faces risks associated with global trade dynamics that may impact its cost structure.
- Ongoing tax litigation with the U.S. Internal Revenue Service (IRS) could have a significant impact if the company does not prevail.
- Unfavorable economic and geopolitical conditions, including the conflict between Russia and Ukraine and conflicts in the Middle East, could negatively impact results.
- The company faces risks related to evolving consumer preferences, product safety, and sustainability concerns.
Future Outlook
The company expects to deliver organic revenue (non-GAAP) growth of 5% to 6% for the full year 2025. Comparable net revenues (non-GAAP) are expected to include a 2% to 3% currency headwind. The company expects comparable currency neutral EPS (non-GAAP) growth of 7% to 9% and comparable EPS (non-GAAP) growth of 2% to 3%. Free cash flow excluding the fairlife contingent consideration payment (non-GAAP) is expected to be approximately $9.5 billion.
Management Comments
- James Quincey, Chairman and CEO of The Coca-Cola Company, stated that the company's performance demonstrates the effectiveness of its all-weather strategy.
- He also noted that the power of the company's global footprint allowed it to successfully navigate a complex external environment.
- Quincey expressed confidence in the company's ability to create enduring long-term value by remaining true to its purpose and staying close to the consumer.
Industry Context
Coca-Cola's focus on emerging markets and innovation in local flavors aligns with broader industry trends of adapting to regional consumer preferences. The company's emphasis on ready-to-drink tea and beverages with added nutrition reflects the growing consumer demand for healthier and convenient options. The company's performance is being impacted by global currency fluctuations, a common challenge for multinational corporations in the beverage industry.
Comparison to Industry Standards
- PepsiCo, a major competitor, also faces similar challenges related to currency fluctuations and supply chain disruptions.
- Nestle, another global beverage and food company, is similarly focused on expanding its presence in emerging markets and innovating in health-focused beverage categories.
- Coca-Cola's organic revenue growth of 6% is a key metric to compare against its peers to assess its competitive position in the market.
- The company's focus on cost management and productivity initiatives is a common strategy among large beverage companies to mitigate the impact of rising input costs.
Stakeholder Impact
- Shareholders may be concerned about the decline in net revenues and negative free cash flow, but reassured by the organic revenue growth and future outlook.
- Employees may be affected by ongoing productivity initiatives and organizational simplification efforts.
- Customers can expect continued innovation in beverage offerings, including healthier options and local flavors.
- Bottling partners are impacted by refranchising activities, which may lead to changes in their operations and relationships with the company.
- Suppliers may face pressure to maintain competitive pricing due to the company's focus on cost management.
Key Dates
- April 29, 2025: Date of the earnings report and conference call.
- March 28, 2025: End date for the first quarter 2025 financial results.
- March 29, 2024: End date for the first quarter 2024 financial results (comparative period).
- December 31, 2024: End date for the 2024 Annual Report on Form 10-K.
Keywords
Coca-Cola, Financial Results, Q1 2025, Organic Revenue, Net Revenue, Unit Case Volume, EPS, Operating Income, Currency Headwinds, Free Cash Flow
KO
Coca Cola CO
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
26 June 2025 11:33 AM
Current Report
- Operating income decreased by 12% in 2024, indicating a decline in core profitability.
- Net cash provided by operating activities significantly decreased by 41% due to the large IRS tax litigation payment, impacting liquidity.
- The company recorded substantial 'Other Operating Charges' including a $760 million impairment for the BodyArmor trademark and a $3,109 million remeasurement of the fairlife contingent consideration liability, indicating significant one-time or non-recurring negative impacts on profitability.
Delay expected
26 June 2025 11:33 AM
Current Report
- Certain initiatives included in the company's productivity and reinvestment program, primarily designed to further simplify and standardize the organization, have been delayed and will now be completed during 2025.
Worse than expected
1 May 2025 3:38 PM
Quarterly Report
- Net operating revenues decreased by 2% due to foreign currency fluctuations and strategic divestitures.
Delay expected
1 May 2025 3:38 PM
Quarterly Report
- Certain initiatives included in the productivity and reinvestment program, which are primarily designed to further simplify and standardize our organization, have been delayed and will be completed during 2025.
Worse than expected
29 April 2025 6:58 AM
Quarterly Report
- Net revenues declined 2% due to currency headwinds and refranchising, indicating worse performance than expected.
- Free cash flow was negative $5.5 billion due to a large contingent consideration payment, indicating worse performance than expected.
Worse than expected
20 February 2025 3:17 PM
Annual Results
- Operating income decreased by 12% due to higher commodity costs, selling, general and administrative expenses, other operating charges, the impact of refranchising, and unfavorable foreign currency exchange rate impact.
Worse than expected
24 October 2024 11:55 AM
Quarterly Report
- The company's operating income decreased by 23% in Q3 2024 compared to Q3 2023.
- The company's net operating revenues decreased by 1% in Q3 2024 compared to Q3 2023.
- The company recorded a $760 million impairment charge related to the BodyArmor trademark.
Worse than expected
23 October 2024 7:00 AM
Quarterly Report
- The company's net revenue declined by 1%, and operating income decreased by 23%, indicating worse than expected results.
- EPS declined by 7%, which is worse than expected.
- The company's cash flow from operations and free cash flow decreased due to a $6.0 billion payment to the IRS, which is worse than expected.
Capital raise
15 August 2024 4:10 PM
Debt Offering Announcement
- The Coca-Cola Company completed a public offering of 1 billion euros in aggregate principal amount of euro-denominated notes.
- The offering includes 500 million euros of 3.375% notes due in 2037 and 500 million euros of 3.750% notes due in 2053.
Capital raise
14 August 2024 4:14 PM
Debt Offering Announcement
- The Coca-Cola Company completed a public offering of $3 billion in senior notes.
- The offering included $750 million of 4.650% notes due in 2034, $1.5 billion of 5.200% notes due in 2055, and $750 million of 5.400% notes due in 2064.
- The company intends to use the net proceeds for general corporate purposes.
Capital raise
9 August 2024 4:24 PM
Debt Offering Announcement
- Coca-Cola is raising $3 billion through a debt offering.
- The offering is split into a US dollar-denominated offering and a euro-denominated offering.
- The US dollar offering includes $750 million of 4.650% notes due 2034, $1.5 billion of 5.200% notes due 2055, and $750 million of 5.400% notes due 2064.
- The euro offering includes 500 million of 3.375% notes due 2037 and 500 million of 3.750% notes due 2053.
Worse than expected
29 July 2024 3:54 PM
Quarterly Report
- Operating income decreased by 17% for the first six months of 2024, indicating a worse performance compared to the same period last year.
- The company recorded significant other operating charges of $2.943 billion for the first six months of 2024, negatively impacting profitability.
- The potential tax liability of $16 billion due to the ongoing dispute with the IRS is a significant financial risk.
Better than expected
23 July 2024 6:58 AM
Quarterly Report
- The company's organic revenue growth of 15% exceeded expectations.
- The company raised its full-year guidance for organic revenue growth to 9-10% and comparable EPS growth to 5-6%.
Capital raise
14 May 2024 4:08 PM
Debt Offering Announcement
- The Coca-Cola Company completed a public offering of €1 billion in Euro-denominated notes.
- The offering was split into two tranches: €500 million of 3.125% notes due in 2032 and €500 million of 3.500% notes due in 2044.
Capital raise
13 May 2024 4:13 PM
Debt Offering Announcement
- Coca-Cola completed a public offering of $3 billion in aggregate principal amount of U.S. dollar-denominated notes.
- The offering included three tranches with different maturities and interest rates.
- The proceeds will be used for general corporate purposes and potentially for tax litigation payments.
Capital raise
8 May 2024 5:07 PM
Debt Offering Announcement
- The company is raising $3 billion through the issuance of US dollar-denominated notes.
- The company is raising 1 billion through the issuance of Euro-denominated notes.
Worse than expected
2 May 2024 1:52 PM
Quarterly Report
- The company's operating income decreased by 36% due to a $760 million impairment charge related to the BodyArmor trademark and a $765 million charge related to the remeasurement of a contingent consideration liability for fairlife.
Worse than expected
30 April 2024 6:58 AM
Quarterly Report
- The company's reported operating income declined by 36%, significantly worse than expected due to substantial charges related to the fairlife acquisition and the BODYARMOR trademark impairment.
Better than expected
13 February 2024 6:57 AM
Quarterly and Annual Earnings Release
- Organic revenue growth exceeded expectations, demonstrating strong underlying business performance.
- Global unit case volume growth indicates continued demand for Coca-Cola products despite market challenges.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.