ATLANTA — Net income, revenue and volume all increased at the Coca-Cola Co. in the first quarter ended April 30, leading the Atlanta-based company to update its 2024 fiscal-year guidance. The positive results came even though charges totaling over $1.5 billion, one related to the acquisition of fairlife, LLC and the other to the BodyArmor trademark, cut into operating margins.
Net income of $3.18 billion, or 74¢ per share on the common stock, was up 2% from $3.11 billion, or 72¢ per share, in the previous year’s first quarter. Revenue increased 3% to $11.30 billion from $10.98 billion. Organic revenue increased 11% with price/mix up 13% and concentrate sales down 2%. Unit case volume increased 1%.
“In the first quarter, we grew volume and expanded comparable margins, and we continued to invest across the business,” said James Robert B. Quincey, chief executive officer, in an April 30 earnings call. “We’re managing currency fluctuations to deliver earnings growth as shown by the 7% comparable earnings-per-share growth despite 9% currency headwinds, and we gained value share in both at-home and away-from-home channels.”
For the fiscal year, Coca-Cola now expects organic revenue growth of 8% to 9%, up from previous guidance of 6% to 7%, and comparable currency neutral earnings per share growth of 11% to 13%, up from 8% to 10%.
Due mainly to the two charges, operating margin fell to 18.9%, which compared to 30.7% in the previous year’s first quarter.
A charge of $765 million was related to the remeasurement of Coca-Cola’s contingent consideration liability to fair value in conjunction with its acquisition of fairlife in 2020.
“Our final payment related to the fairlife acquisition will take place in 2025,” said John Murphy, president and chief financial officer. “This payment has grown as fairlife has outperformed. We continue to be encouraged by our ability to scale fairlife organically.”
A non-cash impairment charge of $760 million was related to the BodyArmor trademark.
“While we are taking a charge to reflect revised projections and a higher discount rate since the acquisition date of BodyArmor, we believe in the power of our two-sports brand strategy with Powerade and BodyArmor,” Murphy said. “We’re taking actions to help create long-term value, and we’re seeing signs that this strategy is working.”
In sparkling soft drinks, unit case volume increased 2% behind 2% growth in Coca-Cola and 6% growth in Coca-Cola Zero Sugar. Volume in juice, value-added dairy and plant-based beverages, behind a strong performance in North America, increased 2%. Water, sports, coffee and tea declined 2% in volume. The declines included 3% in sports drinks and 3% in coffee. Tea volume increased 2%.
In North America, unit case volume overall was even with the previous year’s first quarter. A decline in water, sports, coffee and tea offset growth in juice, value-added dairy and plant-based beverages.
“North America volume had a slow start to the quarter before posting sequential improvement in each of the last two months of the quarter, and elasticities remain favorable, leading to ongoing share gains,” Quincey said.
