Bottles of Coca-Cola at a supermarket in Glattbrugg, Switzerland, on June 26, 2020.Arnd Wiegmann/Reuters
Coca-Cola KO-N is aiming to hit the higher end of its organic sales forecast for 2024 as growing demand for its higher-priced sodas and juices in the U.S. helped it post a surprise rise in third-quarter sales on Wednesday.
Shares of the Sprite and Fanta maker, however, fell 2 per cent as CEO James Quincey flagged decline in volumes in China and the Middle East.
Demand in China has taken a hit from a slow post-pandemic economic recovery caused largely by a protracted property downturn, while the Middle East conflict has impacted supply in the region.
But North America revenue jumped 12 per cent as the company’s efforts to offer 12-ounce slim cans to attract customers with tight budgets in the U.S. drove demand.
“Coca-Cola has shown some pretty fancy footwork to persuade drinkers to keep shelling out premium prices for its products,” said Danni Hewson, head of financial analysis at AJ Bell.
“The team have doubled down on delivering the right product in the right places to the right people.”
The beverage company expects annual organic sales to grow about 10 per cent compared with a prior view of 9 per cent to 10 per cent rise. Its average selling price rose 10 per cent, while unit case volumes fell 1 per cent.
Coca-Cola’s revenue in Europe, the Middle East and Africa fell 7 per cent and in the Asia Pacific region it dropped 4 per cent.
CEO Ramon Laguarta of rival PepsiCo PEP-Q had earlier this month said price increases and borrowing costs were hurting consumer budgets. The Frito-Lay chips maker cut its annual sales forecast after posting quarterly revenue below expectations.
Coca-Cola’s comparable net revenue rose 0.3 per cent to $11.95-billion. Analysts had expected a 2.62 per cent drop, according to data compiled by LSEG.
Its adjusted profit came in at 77 cents per share, compared with estimates of 74 cents and the company stuck to its annual growth forecast for adjusted profit of 5 per cent to 6 per cent despite price hikes.
“The weakness of the stock a little bit here is that they’re leading more on price ... [while] guidance is just being maintained here,” said Christian Greiner, senior portfolio manager at F/m Investments, which owns shares in Coca-Cola.