Important takeaways from Coca-Cola’s (KO) Q4 2024 earnings

The Coca-Cola Company (NYSE: KO) has wrapped up fiscal 2024 on an upbeat note, reporting stronger-than-expected results for the final quarter of the year. Encouraged by the growth in sales across key markets and the success of its all-weather strategy, the company issued positive guidance for fiscal 2025.

The Q4 report triggered a rally, and the company’s stock gained about 4% in pre-market trading soon after the announcement on Tuesday. After retreating from its September peak, the stock has been struggling to regain momentum. In the past six months, KO has lost about 3%.

In the December quarter, the beverage giant’s revenue grew 6% to $11.54 billion from $10.85 billion last year. The latest number topped expectations. Organic revenue, excluding mergers & acquisitions and foreign currency, rose 14% during the three months. Coca-Cola’s highly diverse portfolio, ranging from sparkling soft drinks to plant-based beverages, enables it to effectively navigate through challenges like inflation and economic downturn.

Price Hike

The strong demand for Coca-Cola’s products indicates that customers haven’t stopped purchasing them despite recent price hikes, at a time when consumer-focused businesses are generally witnessing a demand slowdown. While margins benefit from the favorable pricing, elevated operating costs could be a drag on profitability this year.

Adjusted earnings rose to $0.55 per share in Q4 from $0.49 per share a year earlier, exceeding estimates. Net income attributable to shareowners, on an unadjusted basis, was $2.20 billion or $0.51 per share in the fourth quarter, compared to $1.97 billion or $0.46 per share in the year-ago period. Last week, PepsiCo reported flat revenues for its latest quarter amid weak sales in the Americas. Meanwhile, the rival beverage company’s Q4 profit grew by double-digits, aided by stable demand in other markets.

Guidance

For the first quarter, Coca-Cola’s management expects that comparable net revenues will include a 3-4% currency headwind and comparable earnings growth will include a 5-6% currency headwind. For the whole of fiscal 2025, it anticipates a 5-6% organic revenue growth and a 2-3% increase in comparable earnings, on a per-share basis.

Commenting on the Q4 results, Coca-Cola’s CEO James Quincey said, “We are pleased with our 2024 results, which include volume growth, robust organic revenue growth, and comparable gross and operating margin expansion. This led to a 7% comparable earnings-per-share growth despite nearly double-digit currency headwinds and the impact of bottler re-franchising. These results reflect the continuation of delivering on our long-term commitments. Through our all-weather strategy, we’ve demonstrated we have agility to navigate what comes at us and continue to grow comparable earnings per share.”

After a long time, shares of Coca-Cola traded above their 52-week average price this week. On Tuesday afternoon, the stock traded up 3%, maintaining the post-earnings upswing.