Coca-Cola posts net income of $1.97bn in Q4 2023

By Ralph Tathagata

Shares of Coca-Cola are edging higher in premarket trading as the Cola giant
released its fourth-quarter earnings on Tuesday, posting a net income of $1.97 billion.

According to the company’s report, net sales rose 7% to $10.85 billion, beating expectations. Following the company’s latest earnings results, it projected an organic revenue growth of 6% to 7% for 2024.

James Quince, The Coca-Cola Company CEO, while addressing investors during the company’s full-year results on Tuesday, said that in 2023, innovation contributed approximately 30% of the gross profit growth. Gross profit grew by 9% in the year, to $27.23bn.

“We’re applying digital tools, ingredient processing technology, and AI to create bolder and more successful innovation.“

We’re applying learnings from this multi-year success and driving taste superiority elsewhere,” he said.

Quincy highlighted that Coca-Cola is also being more innovative in how it deploys its marketing spend while undergoing a marketing transformation, which has seen it shift its media spend away from being focused on TV and towards digital channels.

He noted that, under the company’s previous model, it took several months to create a TV, while revealing that the company is now “producing 1,000s of pieces of content that are contextually relevant and measuring these results in real time.

“We’re engaging differently with consumers and it’s delivering results,” he noted.

John Murphy, Chief financial officer for the business, said the impact of the marketing spend was evident in the company’s results.

“The positive volume and top-line growth that we’re realising today demonstrates the effectiveness of our marketing spend,” he said.

Breaking down the latest earnings from Coca-Cola and what it could mean for the company moving forward, Murphy said the beverage giant sales topping estimates in its fourth quarter was driven by firm demand and higher prices. He said the consumer, especially in North America remains resilient after it took much sharper pricing in 2023.

“North America volume dropped as less people really bought water, sports drinks, coffee, and tea. But in addition to that, the overall basket continues to increase in pricing and that means that we’re seeing that lower-income consumer yet again will be a bit more value, cost conscious,” he said.

Murphy noted that, because of Coca-Cola’s broad portfolio, the company was able to come up with much more packed configurations that really allows lower-income consumers or any consumer different options that they can buy into.

He said that after carrying over pricing that they took in 2023, they’re expecting a much more normal environment, particularly in the U.S as far as price hikes go for this year. He, however, noted that they have continued to see hyperinflation in countries like Argentina and Africa.

“But a few key elements as far as agriculture commodities goes, well, we’re still seeing some stickiness there. That means the price of sugar, the price of orange juice continues to edge higher globally. The ongoing conflicts in the Middle East are causing changes in the prices of commodities,” he said.

Murphy noted that those conflicts did knock a point off a volume of Coca-Cola’s numbers in the fourth quarter. And he said that this continues to be something that they’re going to watch throughout 2024.

“So, certainly lots of near-term headways, lots of challenges, but the North American consumer seems to continue to put up with those higher prices,” he said.

He pointed out that Coca-Cola’s profit is holding up strong, adding that, because they do have a broad portfolio, they’re able to play with the consumer about what they want and where exactly they’re looking at.


Leave a Reply

Your email address will not be published. Required fields are marked *


    No comments found.