Coca-Cola Co. on Monday topped Wall Street estimates for first-quarter revenue and profit, benefiting from resilient demand for its sodas as well as multiple price increases undertaken to combat higher commodity and shipping costs.
The company said in February it would raise soda prices further in 2023 “across the world” but at a moderating pace, even as rival PepsiCo. hit a pause on price hikes.
Average selling prices increased 11 percent in the first quarter, the maker of Fanta and Sprite said, while global unit case volumes rose 3 percent.
“The strength in case volume growth gives us confidence that sales momentum can continue as Coca-Cola’s sales strategies are resonating with consumers,” Edward Jones analyst Brittany Quatrochi said.
The company’s shares were up about 1 percent in early trading.
Pepsi and Coca-Cola have faced little or no pushback from consumers to price increases thanks to their near-domination of the global carbonated drinks market.
Still, on an earnings call Coca-Cola CEO James Quincey said, “There is uncertainty on how the consumer environment may ultimately play out in 2023.”
Quincey also said the recent banking crisis has fueled further uncertainty about purchasing behaviors in Europe, while consumption is still recovering to pre-pandemic levels in China after the lifting of curbs.
Meanwhile, first-quarter operating margin slipped to 30.7 percent, compared to 32.5 percent a year earlier, on higher operating costs, increased marketing spending, investments and a strong dollar.
On the call, executives said freight expenses as well as some commodities costs were moderating but prices for sweeteners and juices were trending higher.
“With pricing expected to moderate over the course of the year, this should come in tandem with moderating levels of commodity inflation, which should help to protect profitability,” said Wedbush analyst Gerald Pascarelli.
Revenue rose 4.3 percent to $10.96 billion, beating estimates of $10.80 billion, according to Refinitiv data, while adjusted earnings of 68 cents per share topped expectations of 64 cents.