Coca-Cola Reports First Quarter 2023 Results

April 24, 2023

Global Unit Case Volume Grew 3%

Net Revenues Grew 5%;
Organic Revenues (Non-GAAP) Grew 12%

Operating Income Declined 1%;
Comparable Currency Neutral Operating Income (Non-GAAP) Grew 15%

Operating Margin Was 30.7% Versus 32.5% in the Prior Year;
Comparable Operating Margin (Non-GAAP) Was 31.8% Versus 31.4% in the Prior Year

EPS Grew 12% to $0.72; Comparable EPS (Non-GAAP) Grew 5% to $0.68

ATLANTA–(BUSINESS WIRE)– The Coca-Cola Company today reported first quarter 2023 results, demonstrating resilience in the marketplace despite an operating environment that remains dynamic. “We are encouraged by our first quarter 2023 results,” said James Quincey, Chairman and CEO of The Coca-Cola Company. “Our system alignment is stronger than ever, and our networked organization is allowing us to adapt as needed. We continue to invest for the long term, strengthening our capabilities to drive sustainable value for our stakeholders. We have the right portfolio, the right strategy and the right execution to deliver in the marketplace. We are confident in our ability to deliver on our 2023 objectives.”

• Revenues: Net revenues grew 5% to $11.0 billion, and organic revenues (non-GAAP) grew 12%. Revenue performance included 11% growth in price/mix and 1% growth in concentrate sales. Concentrate sales were 2 points behind unit case volume, largely due to the timing of concentrate shipments and the impact of one less day in the quarter.

• Operating margin: Operating margin was 30.7% versus 32.5% in the prior year, while comparable operating margin (non-GAAP) was 31.8% versus 31.4% 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.

• Earnings per share: EPS grew 12% to $0.72, and comparable EPS (non-GAAP) grew 5% to $0.68. Comparable EPS (non-GAAP) performance included the impact of a 7-point currency headwind.

• Market share: The company gained value share in total nonalcoholic ready-to-drink (NARTD) beverages.

• Cash flow: Cash flow from operations was $160 million, a decline of approximately $460 million versus the prior year, largely due to the timing of working capital initiatives and payments related to acquisitions and divestitures. Free cash flow (non-GAAP) declined approximately $520 million versus the prior year, resulting in negative free cash flow of approximately $120 million.

• Growing loved brands through consumer-centric innovation and occasion-based marketing: smartwater®, a billion-dollar brand that is available in 28 markets, grew volume 8% in the first quarter. The company continues to innovate with the brand, recently launching smartwater alkaline with antioxidant to offer premium hydration for consumers with active lifestyles. The innovation features a higher pH level, the antioxidant selenium and a unique electrolyte blend for a crisp, pure taste. The launch was supported by the “Elevate How You Hydrate” marketing campaign, which was promoted through digital platforms such as Spotify, Meta and TikTok, as well as through partnerships with comedian Pete Davidson, Peloton instructor Alex Toussaint and others. The campaign used geolocation apps to drive incremental occasions with on-the-go consumers and segmented experiential sampling in gyms and fitness centers in select U.S. cities.

• Driving value through continued excellence in integrated execution in India: The company, in close alignment with its bottling partners, continues to raise the bar in India in integrated execution to deliver value for its customers and consumers. The company grew its business in the first quarter in India by adding retailers, investing in cold-drink equipment and offering the right products at the right price points to recruit consumers. During the first quarter, the company and its bottling partners increased availability by more than 300,000 stores and approximately 40,000 coolers ahead of the summer season and drove approximately 3 billion transactions at affordable price points through single-serve packages and at-home entry packs. The company also increased household penetration via targeted promotions on large packages for the at-home channel. This integrated execution yielded strong results, as the company grew revenue ahead of transactions and grew transactions ahead of volume, while also growing value share in the sparkling soft drinks and juice categories.

• Collaborating with cutting-edge technology platforms to experiment, learn and drive results: The company is adopting emerging technologies to drive new approaches, more experimentation and improved speed to market. Coca-Cola is the first company to collaborate with OpenAI and Bain & Company to harness the power of ChatGPT and DALL-E to enhance marketing capabilities and business operations and to build capabilities through cutting-edge artificial intelligence (AI). Within one month of announcing this collaboration, the company launched the “Create Real Magic” platform, which allowed consumers to become digital marketeers by leveraging AI to generate original artwork with iconic creative assets from the Coca-Cola archives. The company is also exploring ways to leverage AI to improve customer service and ordering as well as point-of-sale material creation in collaboration with its bottling partners.

• Laying out a roadmap to 2030 Water Security Strategy and driving collective action: Water is a priority for the company because it is essential for beverages and the communities the company serves. Sustainable access to water is critical for the company’s success and the resilience of its agricultural supply chain. During the UN 2023 Water Conference in March, the company announced three goals to accelerate action by investing more in its Leadership Locations, which are basins designated based on needs for the company, its supply chain and impacted communities. In addition, the company is working with other partners and stakeholders to improve watershed health and communities’ access to clean water and sanitation as part of the Business Leaders’ Open Call to Accelerate Action on Water – a partnership to achieve collective positive water impact in at least 100 vulnerable water basins by 2030.