Coca-Cola beats profit estimates, raises full-year guidance

COCA-COLA said third-quarter sales and profit surpassed expectations and the beverage giant raised its guidance for the year, as the company got a boost from value-conscious products amid soaring inflation.

The Atlanta-based soft-drink maker, whose beverages include Fanta sodas, Minute Maid juices and Powerade sports drinks, said on Tuesday (Oct 25) that it benefited from bundling different sizes and mixes of its products for inflation-wary consumers.

The company said it now sees organic revenue growth of 14 per cent to 15 per cent for the full year. In July, Coca-Cola increased its full-year outlook from 12 per cent to 13 per cent. Coca-Cola’s adjusted operating revenue was US$11.1 billion in the quarter ended Sep 30, beating the US$10.51 billion Bloomberg consensus.

The increased outlook for the year shows that Coca-Cola is maintaining demand with help from items like the Coca-Cola Value Bundle, which offers customers beverage options at more affordable prices.

“When you segment the population, there are certain groups that are going to be under more pressure than others,” chief financial officer John Murphy said in an interview. “It’s an opportunity to offer them solutions at a price point that will be effective to them.”

Key competitor PepsiCo also increased its organic revenue growth projection, to 12 per cent from 10 per cent, earlier this month.

Coca-Cola said it’s seeing strong results from its ready-to-drink alcohol beverages, which include Fresca Mixed, Topo Chico hard seltzers, and Schweppes cocktail mixers and tonics.

The company said consumers were continuing to return to public venues such as theatres, stadiums and restaurants, and that freight costs in some parts of the world, such as China, have declined. “I think there has been a reduction in both the container costs and a reduction in demand,” Murphy said. But within the US, he said, fuel and labour shortages continue to keep freight transportation costs high. “We will continue to see relatively high costs for trucking,” he said.

Coca-Cola’s organic revenue, which excludes the impact of currency shifts and acquisitions, increased by 16 per cent in the third quarter. Analysts had expected a 9.8 per cent increase.

The shares rose 0.6 per cent in premarket trading. The stock has declined 2.8 per cent so far this year through Monday’s close - better than the 20 per cent tumble of the S&P 500 Index. BLOOMBERG