Coca-Cola on Wednesday raised its full-year outlook after reporting earnings and revenue that topped estimates.
"On the positive side, many supply chain pressures eased, concern surrounding the bank sector diminished and energy prices continue to pull back from record highs," CEO James Quincey said.
But he held off from taking a victory lap, warning that some customers are switching to cheaper private label drinks and that some commodities, like sugar and corn syrup, are still putting pressure on the company's profit margins.
Shares of the company closed up more than 1% on Wednesday.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 78 cents adjusted vs. 72 cents expected
- Revenue: $11.97 billion adjusted vs. $11.75 billion expected
The beverage giant reported second-quarter net income attributable to shareholders of $2.55 billion, or 59 cents per share, up from $1.91 billion, or 44 cents per share, a year earlier.
Excluding refranchising gains, restructuring costs and other items, Coke earned 78 cents per share.
Net sales rose 6% to $11.97 billion. The company's organic revenue, which strips out the impact of acquisitions and divestitures, increased 11% in the quarter, fueled by higher prices.
Following its rival PepsiCo, Coke gave a rosier outlook for the rest of the year.
For 2023, Coke now expects comparable adjusted earnings per share growth of 5% to 6%, up from its prior forecast of a 4% to 5% rise. The company also hiked its outlook for organic revenue and now predicts an increase of 8% to 9%, up from its previous range of 7% to 8%.
Like many food and beverage companies, Coke has been hiking prices on its products in response to higher commodity costs. In the first quarter, it raised prices again, even as PepsiCo said it wasn't planning to increase prices this year.
Coke's pricing strategy hasn't sparked significant backlash yet from customers, although Quincey said consumers are switching to private label bottled water and juices in Europe and the U.S.
Coke isn't expecting to hike prices much further in either region, he said.
"In these markets, pricing is largely in place and it's expected to moderate as we cycle pricing initiatives from the prior year," he told investors on the company's quarterly conference call.
Worldwide, Coke's unit case volume, which excludes the impact of pricing and currency changes, was flat for the quarter. Its U.S. volume fell just 1%, dragged down by falling demand for its namesake soda, Powerade and bottled water.
The company's three drinks divisions all reported flat growth for the quarter, but there were some bright spots. Coke Zero Sugar's volume rose 5%, thanks to strong demand in North America and Latin America.
Ultra-filtered milk brand Fairlife saw strong growth in the U.S. Coke's coffee division also reported volume growth of 5%, fueled by Costa Coffee's performance in the United Kingdom and China.