Coca-Cola Company logged higher sales for the latest quarter as stronger demand and price increases helped the beverage giant offset surging input costs.
Coke’s organic revenue, which strips out currency swings as well as acquisitions or divestitures, rose 18% in the quarter ended April 1, as unit case volume rose 8%. The company also benefited from higher prices and the mix of products sold in the first quarter.
The cost of goods sold rose 17% to $4.09 billion. Still, Coke’s operating income increased 25% to $3.41 billion from a year earlier.
Despite Coke’s financial results being better than analysts had projected, the company stuck to its full-year earnings guidance, which includes expectations that commodity costs will be higher than last year.
“We continue to believe the recovery in 2022 will be asynchronous,” Coca-Cola Chief Executive
James Quincey
told analysts on a conference call Monday, adding that the operating environment this year is proving more challenging than expected.
In recent quarters, Coke and rival
PepsiCo Inc.,
which is to report first-quarter results Tuesday, have faced surging prices for inputs, including the high-fructose corn syrup in their drinks, the aluminum used to make their cans and the cost of moving products around the world.
At the same time, Coke’s business selling drinks and concentrates to stadiums, movie theaters and restaurants is rebounding as more consumers grow comfortable going out amid waning pandemic restrictions.
On the earnings call, several analysts asked Coke executives about the company’s ability to raise prices in markets around the world as inflation pinches consumers’ spending power. Further efforts to change prices will depend on the health of consumers and state of inflation as the year progresses, Mr. Quincey said. In addition to raising prices, he said the company has been sharpening its product marketing and package offerings.
“We certainly aren’t looking to take price increases just because we can,” Mr. Quincey said. “We want to earn them as a brand and we want to make sure we recover the cost over time.
Coke also said its suspension of business in Russia as a result of the country’s invasion of Ukraine will hurt full-year adjusted earnings by 4 cents a share and case volumes. It previously guided adjusted per-share earnings growth this year of 5% to 6%, implying a range of about $2.44 to $2.46.
Shares in Coke were little changed in Monday trading.Some say rising inflation means companies are forced to raise their prices. But as WSJ’s Dion Rabouin explains, it actually works the other way around: Corporations actually drive inflation, and data show that they have been and will continue to push prices up for some time. Illustration: Elizabeth Smelov
Coke and PepsiCo have been overhauling their product portfolios recently to keep up with changing consumer tastes. In November, Coke struck a $5.6 billion deal to take full control of BodyArmor, a sports-drink brand that has been increasing sales faster than Coke’s soda business. PepsiCo closed on the sale of its Tropicana juice business, which had slower sales growth than other units.
Overall for the quarter, Coke posted a profit of $2.78 billion, or 64 cents a share, compared with $2.25 billion a year earlier. Analysts surveyed by FactSet were expecting earnings of 58 cents a share.
Sales rose 16% to $10.49 billion. Analysts surveyed by FactSet were looking for $9.83 billion.
