The Coca-Cola Company (NYSE:KO) has released its fourth-quarter 2023 results, surpassing both revenue and earnings estimates according to Consensus. Notably, both earnings and sales have shown improvement compared to the previous year, thanks to the sustained momentum in the company’s operations. Coca-Cola has also provided insights into its outlook for 2024.

Earnings per share stood at 49 cents, marking a 10% increase from the same period last year and outperforming the Consensus Estimate of 48 cents. However, adverse currency translations had a negative impact of 13 percentage points on comparable earnings. Adjusting for currency fluctuations, comparable earnings per share saw a robust 23% year-over-year growth.

Total revenues amounted to $10,849 million, exceeding the Consensus Estimate of $10,645 million and registering a 7% increase from the previous year. Organic revenue growth was particularly strong, climbing 12% compared to the same quarter last year. Coca-Cola’s revenue growth across various operating segments was driven by improved pricing strategies and increased concentrate sales. The company also expanded its global market share in the non-alcoholic ready-to-drink beverages category during the reported quarter.

Despite facing some challenges, including unfavorable currency effects, Coca-Cola’s stock has seen a 4.6% rise over the past three months, slightly trailing behind the industry’s growth rate of 4.9%.

Volume and Pricing Analysis

In the fourth quarter, concentrate sales rose by 3% year over year, while the price/mix improved by 9%. The price/mix growth was attributed to various pricing strategies deployed in the market, including adjustments made in hyperinflationary economies, coupled with a favorable product mix. Notably, concentrate sales outpaced unit case volume by one point during the quarter.

Coca-Cola’s total unit case volume witnessed a 2% increase year over year in the fourth quarter. While developed markets maintained stability with flat unit case volume, emerging markets experienced a 4% growth, driven by strong performances in India and Brazil.

Segment Performance

Across different geographic segments, Latin America saw the highest revenue growth at 16%, followed by EMEA (11%), North America (5%), Asia Pacific (7%), Global Ventures (10%), and Bottling Investments (2%).

Margins and Profitability

Operating income increased by 10% year over year to $2,273 million, despite facing an 11-point impact from currency headwinds. The comparable operating income also showed a strong growth of 9.1% year over year. Adjusted for currency effects, the comparable operating income surged by 20% due to robust organic revenue growth across all segments. Consequently, the operating margin expanded to 21%, up by 50 basis points from the prior year.

Outlook for 2024

Management has provided guidance for 2024, expecting organic revenue growth of 6-7%. Comparable revenues are projected to be affected by a 3-4% currency headwind and a 4-5% negative impact from acquisitions and divestitures. Comparable currency-neutral earnings per share are anticipated to grow by 8-10% year over year, with a 4-5% headwind from currency fluctuations and a 2% impact from acquisitions and divestitures.

Additionally, management forecasts an adjusted free cash flow of $9.2 billion for 2024, with capital expenditures estimated at $2.2 billion. For the first quarter of 2024, comparable revenues are expected to face a 4% currency headwind and a 2% negative impact from acquisitions, divestitures, and structural changes. Comparable earnings per share for the first quarter are estimated to be impacted by an 8% currency headwind and a 1% negative impact from acquisitions, divestitures, and structural changes.

Featured Image: The Guardian © Henry Mcdonald

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