Key Points
- Net revenues grew 3% to $12.4 billion.
- EPS declined 5% to $0.56.
- Operating income increased by 10%.
The Coca-Cola Company (KO -1.09%), the global beverage leader, released its earnings for the second quarter of 2024 on July 23.
The most essential news from the release was the 3% growth in net revenues, reaching $12.4 billion. However, earnings per share (EPS) saw a decrease of 5% to $0.56, largely due to anticipated currency headwinds. In contrast, comparable EPS (non-GAAP) increased by 7% to $0.84. Management had previously guided an 8% to 9% currency headwind in comparable EPS (non-GAAP) for this quarter, which is what the company experienced.
Overall, the had a solid performance in revenue and operating income growth, but the EPS decline and currency impacts stood out.
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Revenues | $12.4 billion | $11.97 billion | 3% |
| Operating Income | $2.63 billion | $2.40 billion | 10% |
| EPS | $0.56 | $0.59 | -5% |
| Comparable EPS (Non-GAAP) | $0.84 | $0.78 | 7% |
| Cash Flow from Operations | $4.1 billion | $4.6 billion | -11% |
Overview of Coca-Cola's Business
The Coca-Cola Company, best known for its flagship soda Coca-Cola, is a global giant in the beverage industry. It operates across various segments including sparkling soft drinks, water, sports drinks, teas, and juices. Recently, the company has focused on sustainability initiatives, brand innovation, and expanding its global distribution network. Factors that are key to its continued success include the strength of its brand portfolio and operational efficiency driven by a vast network of bottling partners.
Quarterly Highlights and Financial Performance
Revenue and Earnings Performance: Net revenues increased 3% to $12.4 billion, though EPS fell 5% to $0.56. The comparable EPS grew 7% to $0.84. Operating income rose by 10% to $2.63 billion driven by strong organic revenue growth of 15%, despite headwinds from currency fluctuations and structural changes due to acquisitions and divestitures.
Regional Performance: Key regions showed mixed performance:
- Europe, Middle East & Africa: Flat unit case volume with 11% increase in operating income, despite 22-point currency headwinds.
- Latin America: Experienced 5% volume growth and a 15% rise in operating income.
- North America: A slight decline in unit case volume but marginal revenue growth.
- Asia Pacific: 3% volume growth but a decline in operating income due to factors including marketing and higher input costs.
Marketing and Innovation: The company's "Celebrate Everyday Greatness" Olympic campaign and other marketing efforts boosted Powerade's volume by 6% in the quarter. There was also innovation in distribution, such as leveraging AI in Latin America for quicker market responses.
Look Ahead
Outlook for Q3 2024: Management projects headwinds due to currency and structural changes at approximately 4% to 5% for comparable net revenues. EPS is expected to be impacted by about 8% from currency and 1% to 2% from structural changes.
Full-Year 2024 Guidance: The company updated its organic revenue growth to 9% to 10% from the previous 8% to 9%. Comparable currency-neutral EPS growth guidance increased to 13% to 15%. Free cash flow projections remain at $9.2 billion. on regional performances, especially the North American market.
