What’s Behind Coca-Cola’s Raised Profit and Revenue Projections?
The Coca-Cola Company projects a rise in its annual revenue and profit, driven by increased pricing and consistent demand for its soda brands. This has seen its shares appreciate by roughly 2% in premarket trading.
Consumer goods companies like Coca-Cola have reacted to the surge in commodities prices and logistics costs, prompted by supply chain issues and the Russia-Ukraine conflict, by raising their product prices. Despite inflationary pressures impacting non-essential spending, consumers continue to purchase soft drinks and snacks.
In the second quarter, Coca-Cola’s average selling prices went up by 10%, with North American volumes dropping by 1%. However, overall unit case volumes remained unaffected. A 192-ounce Coca-Cola soda in the U.S. rose to $9.35 in 2022 from $8.03 in 2021, according to NielsenIQ, and it stood at $10.56 as of June 17 this year.
Similarly, PepsiCo revised its annual revenue and profit forecasts upward after surpassing second-quarter expectations, allaying fears about a slump in demand due to price increases.
In the Asia Pacific region, China’s pandemic relaxation measures boosted consumer activity, leading to increased Coca-Cola revenue. Like their counterparts in Europe, Asian consumer goods manufacturers have managed to pass on higher costs through price hikes.
Coca-Cola now anticipates an organic revenue growth of 8% to 9% for the year, up from the previous prediction of 7% to 8%. The expected rise in full-year core earnings per share is now between 5% and 6%, compared to the earlier estimate of 4% to 5%.
James Quincey, Coca-Cola’s Chairman and CEO, expressed optimism about their strategic approach and the robustness of their business, leading to the uplifted 2023 guidance.
