Coca-Cola’s 2Q 2023 EPS Surge 34%, Net Revenues Rise 6%
Image credit: Costa Coffee
The Coca-Cola Company, the parent company of brands such as Costa Coffee, Gold Peak Tea, Peace Tea, Fuzetea, Ayataka, and doğadan, today reported strong second quarter 2023 results.
Coffee grew 5%, primarily driven by the strong performance of Costa® coffee in the United Kingdom and China. Tea grew 1%, primarily driven by growth in Latin America, partially offset by a decline in doğadan® in Türkiye. North America unit case volume declined 1%, as growth in sparkling flavours and juice, value-added dairy and plant-based beverages was more than offset by declines in water, sports, coffee and tea as well as Trademark Coca-Cola®.
Net revenues grew 6% to USD $12.0 billion, and organic revenues (non-GAAP) grew 11%. Revenue performance included 10% growth in price/mix and 1% growth in concentrate sales. Concentrate sales were 1 point ahead of unit case volume, largely due to the timing of concentrate shipments.
Operating margin was 20.1% versus 20.7% in the prior year, while comparable operating margin (non-GAAP) was 31.6% versus 30.7% in the prior year. Operating margin decline was primarily driven by items impacting comparability and currency headwinds. Comparable operating margin (non-GAAP) expansion was primarily driven by strong topline growth and the impact of refranchising bottling operations, partially offset by an increase in marketing investments and higher operating costs versus the prior year, as well as currency headwinds.
EPS (earning per share) grew 34% to $0.59, and comparable EPS (non-GAAP) grew 11% to $0.78. Comparable EPS (non-GAAP) performance included the impact of a 6-point currency headwind.
In terms of market share, Coca-Cola gained value share in total nonalcoholic ready-to-drink (NARTD) beverages.
Cash flow from operations was $4.6 billion year-to-date, an increase of $83 million versus the prior year, driven by strong business performance and working capital initiatives, partially offset by the transition tax payment made during the second quarter. Free cash flow (non-GAAP) was $4.0 billion year-to-date, a decline of $45 million versus the prior year.
“I am encouraged that our all-weather strategy, working together with our bottling partners, has delivered strong second quarter results,” said James Quincey, chairman and CEO of Atlanta, Georgia-based The Coca-Cola Company. “We are executing efficiently and effectively on a local level, while maintaining flexibility on a global level. The strength of our first half results and the resiliency of our business gives us the confidence to raise our 2023 guidance.”
To support the company’s goal to reduce carbon emissions by 25% by 2030, against a 2015 baseline, The Coca-Cola Company and eight leading global bottling partners created a first-of-its-kind sustainability-focused $137.7 million venture capital fund in partnership with Greycroft, a seed-to-growth venture capital firm. The fund aligns with the company’s networked approach to sustainability and has the potential to help advance solutions across its global value chain by investing in sustainability-focused companies at the point of commercialisation. Reducing the Coca-Cola system’s carbon footprint is a top priority for the fund, so it will initially prioritise five key areas with the most potential impact: packaging, heating and cooling, facility decarbonisation, distribution and supply chain.
