ATLANTA — The Coca-Cola Co. has raised its guidance for the fiscal year after revenues and unit volume both increased in the second quarter ended June 30.
Net income of $2.41 billion, equal to 56¢ per share on the common stock, was down 5% from $2.55 billion, or 59¢ per share, in the previous year’s second quarter, but revenues increased 3% to $12.36 billion from $11.97 billion. Organic revenues increased 15%. Unit case volume was up 2% overall. Contributing to growth were price/mix, up 9%, and concentrate sales, up 6%.
Atlanta-based Coca-Cola for the fiscal year now expects organic revenue growth of 9% to 10%, up from a previous guidance of 8% to 9%, and comparable EPS growth of 5% to 6%, up from 4% to 5%.
Volume growth will remain a priority.
“It’s critically important, particularly when times get tougher, to try and keep as many consumers in the franchise as possible rather than trying to re-recruit them at some later stage, and they’re in our focus, not just on marketing innovation but affordability within the price-pack architecture side,” said James Quincey, chief executive officer of Coca-Cola, in a July 23 earnings call. “Clearly, an objective of ours is not to see negative volumes and to make sure we keep people in and use all the elements to do that.”
Unit case volume rose 3% in sparkling soft drinks with Coca-Cola Zero Sugar up 6% and trademark Coca-Cola up 2%. Volume increased 2% in juice, value-added dairy and plant-based beverages, with North America and Asia Pacific leading the way.
Volume was even in water, sports, coffee and tea. Sports drinks increased 3%.
“We had some positive volume growth in Body Armor and Powerade, and we’re really starting to see the kind of stabilization with the marketing and the innovation and some pack price work going on there,” Quincey said.
Tea volume increased 1%, but declines came in water, down 1%, and coffee, down 4%.
In North America, volume declined 1%. Declines in water, sports, coffee and tea, trademark Coca-Cola, and sparkling flavors more than offset growth in juice, value-added dairy and plant-based beverages. Quincey said softer spots have shown up in the away-from-home channels as lower-income consumers are going out to eat less often.
“But when they do go somewhere, (they are) looking for greater value through combo meals,” Quincey said.
In Latin America, unit case volume increased 5% due to growth in trademark Coca-Cola and water, sports, coffee and tea. In Europe, Middle East and Asia, unit case volume was even as declines in trademark Coca-Cola and juice, value-added dairy and plant-based beverages offset growth in water, sports, coffee and tea, and sparkling flavors.
“In Eurasia and Middle East, geopolitical tension and economic uncertainty continue to impact our business,” Quincey said.
In Asia Pacific, volume increased 3%, driven by growth in sparkling flavors and trademark Coca-Cola. Refranchising in the Philippines has started well, with volume in that country growing by double-digit percentages, but consumer confidence in China remains subdued, Quincey said.
Quincey gave two examples of Coca-Cola using artificial intelligence (AI).
“We’re piloting an AI-based price-pack channel optimization tool across several markets that evaluates opportunities to better tailor solutions to drive incremental volume and revenue,” he said. “Early results show that the tool helps improve both our offerings and speed to market. Our system is also piloting an AI-driven initiative to push personalized messages to retailers with suggested items based on previous orders and market data. Initial pilots indicate that retailers who receive the messages are over 30% more likely to purchase recommended SKUs, which results in incremental sales for our retailers and the system.”
Over the first six months of the fiscal year, Coca-Cola companywide had net income of $5.59 billion, or $1.30 per share on the common stock, which was down 1% from $5.65 billion, or $1.31 per share, in the same time of the previous year. Six-month revenues rose 3% to $23.66 billion from $22.95 billion.
