Coca-Cola has ridden the wave of inflation to raise the prices of its products, which has boosted its revenue and profits, according to the results published today by the multinational American based in Atlanta. The company earned 3,107 million dollars (about 2,820 million euros at the current exchange rate) in the first quarter of the year, 12% more than in the same period last year, thanks also to some extraordinary items. The numbers have exceeded analysts’ forecasts for the 14th consecutive quarter.
Coca-Cola revenue grew 5% in the quarter to $10.98 billion, despite a 6% negative currency impact. This was possible thanks to an 11% increase in prices (due to increases or the composition of products sold), especially pronounced in the Europe, Middle East and Africa region, where operating profit has skyrocketed. The volume increase was 3%, after the slight decrease in the fourth quarter of 2022. Coca-Cola has been able to raise prices without affecting demand.
In the composition of the products, it impacts that consumers are drinking more soft drinks and beverages outside the home, where containers with a higher price are consumed than in home consumption, as explained by the company’s executives in the conference with analysts. The president and CEO of the company, James Quincey, has indicated that he expects price increases to moderate throughout the year.
The increase in costs, exceptional items and the impact of exchange rates, however, caused the operating result to fall slightly, 1%. The company ensures that the comparable operating result at a constant exchange rate improves by 15%. In the end, the new franchise agreement for its operations in Vietnam provided an extraordinary result of 439 million dollars which, together with other non-recurring items, has made the company earn 12% more.
The mole of the accounts is in the generation of cash. Operating cash flow was $160 million, down approximately $460 million from the prior year, which the company attributes “in large part to the timing of working capital initiatives and acquisition-related payments.” and divestments”. As a result, free cash flow decreased by approximately $520 million, resulting in negative free cash flow of approximately $120 million.
In volume, sales of sparkling soft drinks grew 3%, driven by good results in Asia-Pacific and Latin America, partially offset by the suspension of business in Russia. The Coca-Cola brand grew 3%, thanks mainly to the 8% pull of Coca-Cola Zero. Sales of juices, dairy products and organic drinks remained stable. Water sales rose 5%, driven by strong growth in Asia-Pacific and Latin America. Sports drinks (Bodyarmor, Powerade) decreased 1%. Tea fell 3%, mainly from the Doğadan brand, which was affected by the earthquake in Turkey in February. Coffee grew 9%, driven mainly by the good results of Costa coffee in the United Kingdom and China, according to the company.
“We are encouraged by our first quarter 2023 results,” said James Quincey. through a statement. “Our system alignment is stronger than ever, and our networked organization allows us to adapt as needed. We continue to invest in the long term, reinforcing our capabilities to drive sustainable value for our stakeholders. We have the right portfolio, strategy and execution to act in the market. We are confident in our ability to meet our goals by 2023″, she has indicated.
For the year as a whole, Coca-Cola maintains its forecasts, which point to organic growth of 7%-8% in revenue and 4%-5% in comparable earnings per share. The company expects to generate free cash flow of approximately $9.5 billion through operating cash flow of approximately $11.4 billion, less investments of $1.9 billion, not including potential payments related to tax litigation in course.
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