Coca-Cola (KO), the world’s most valuable beverage company, is expected to report revenue growth fell in the first quarter to its slowest rate since 2020 as exchange rates and the suspension of operations in Russia weighed on sales.
- Coca-Cola is projected to report sluggish revenue growth and flat net income in the first quarter of 2023.
- Worldwide case volume growth probably slowed as inflation drives up prices and consumers pull back on purchasing.
- The strong U.S. dollar and suspension of business in Russia are weighing on sales in Europe, Coca-Cola's second-largest market.
Coca-Cola is expected to post first-quarter earnings of $2.8 billion, or 64 cents a share, effectively unchanged from a year ago, according to estimates compiled by Visible Alpha. Total revenue is expected to rise 3% year-over-year to $10.8 billion. Revenue growth is expected to slow worldwide, but nowhere more than in Europe where sales probably fell 3% from a year ago, with foreign exchange shrinking revenue by as much as 12%. Coca-Cola reports earnings before markets open Monday.
After Coca-Cola delivered its fourth-quarter 2022 earnings, the company warned that inflation would drive price increases in 2023 that could affect sales. That could be seen in Coca-Cola’s global unit case volume growth metric, which is projected to fall to 0.9% from 8% a year ago.
The value of the company’s products sold, represented by its price/mix ratio, is projected to come in at 9.9%, up from 7% a year ago.
Coca-Cola raised its dividend for the 61st straight year in February to 46 cents from 44 cents a share, bringing the stock's dividend yield to 3.1%.
Coca-Cola shares are up 1% so far this year, underperforming both the S&P 500 (up about 9%) and the S&P 500 Consumer Staples Sector (up about 2.5%).
Key Metric: Global Unit Case Volume
Global unit case volume is a key metric in evaluating Coca-Cola. It represents the company’s total volume of drinks sold, stripping out the impact that changes in currency rates and prices can have on revenue.
Coca-Cola reports its case volume for major regions, as well as global numbers. Global unit case volume growth is expected to drop over 700 basis points to 0.86%. Latin America, Asia Pacific, and North America are all expected to report volume growth, albeit at the lowest rates in years. Latin America's growth might fall to just 0.8% from 9% a year ago.
European case volume is expected to shrink 3.5%, making it the only region in which sales are seen falling. Coca-Cola's European business has been hit hard by the war in Ukraine, which has exacerbated already-high inflation in the euro area and prompted the company to pull out of Russia last March, a decision that has unfavorably skewed year-over-year comparisons in two of the last three quarters.
|Coca-Cola Key Metrics|
|Q1 FY2023 (estimate)||Q1 FY2022||Q1 FY2021|
|Diluted earnings per share ($)||0.64||0.64||0.52|
|Global unit case volume growth (%, YOY)||0.86||8||0|
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Coca-Cola. "Coca-Cola Reports Fourth Quarter and Full-Year 2022 Results."
Coca-Cola Co. "The Coca-Cola Company Announces Nomination of New Director and Approves 61st Consecutive Annual Dividend Increase."