Coca-Cola grows earnings and holds outlook steady in Q1

Overview

The Coca-Cola Company delivered a resilient performance in Q1 2025, overcoming foreign exchange headwinds and structural changes with strong organic revenue growth and margin expansion.

Chairman and CEO James Quincey emphasized: “Our performance this quarter once again demonstrates the effectiveness of our all-weather strategy. Despite some pressure in key developed markets, the power of our global footprint allowed us to successfully navigate a complex external environment. By remaining true to our purpose and staying close to the consumer, we are confident in our ability to create enduring long-term value.”

Q1 2025 vs. Q1 2024:

Net revenues recorded a value of $11.1bn (-2% reported, but +6% organic), loss on a reported basis due to currency headwinds and bottling refranchising, while organic growth driven by 5% price/mix improvement and 1% concentrate sales growth.
Operating income increased to $3.66bn (+71% reported), boosted by organic revenue growth, effective cost management, and timing of marketing investments.
Operating margin was 32.9% (vs. 18.9% prior year), while comparable operating margin was 33.8% (vs. 32.4% in Q1 2024), driven by strong organic growth and structural benefits from refranchising.
EPS grew to $0.77 (+5% YoY), while comparable EPS was $0.73 (+1% YoY), impacted by a 9-point and 5-point currency headwind on reported and comparable results, respectively.
Free cash flow decreased significantly to a value of -$5.5bn (vs. $158m in Q1 2024), heavily impacted by a $6.1bn contingent payment related to the 2020 fairlife acquisition. Excluding this, free cash flow was positive at $558m.
Global unit case volume increased +2% YoY, led by India, China, and Brazil, with Sparkling Soft Drinks grew +2% YoY, Coca-Cola Zero Sugar rose +14% YoY, and Water/Sports/Coffee/Tea categories grew +2% YoY.
- Europe, Middle East & Africa (EMEA) unit case volume increased +3% YoY, supported by strong growth in Coca-Cola Trademark and sparkling flavors. Despite foreign exchange headwinds, comparable operating income rose +8% YoY on a currency-neutral basis.
- Latin America had flat unit case volume masked strong pricing (+16% YoY) and improved brand execution. Comparable operating income climbed +18% YoY in currency-neutral terms, reflecting robust pricing power and margin discipline.
- North America unit case volume declined -3% YoY, due to moderating consumer demand, but pricing was up +8% YoY, leading to revenue and value share gains, especially in juice and plant-based beverages. Reported operating income surged +170% YoY, with +4% growth in comparable operating income.
- Asia Pacific unit case volume advanced +6% YoY, with broad-based category strength across sparkling soft drinks, water, coffee, and juice. Comparable operating income rose +7% YoY currency-neutral, driven by local marketing activations and innovation.
- Bottling investments volume fell -17% YoY, primarily due to structural impacts from refranchising activities. Comparable operating income declined -21% YoY currency-neutral, reflecting portfolio transition effects.
The company had strong cash and short-term investments position at $12.0bn at quarter-end.

Coca-Cola reaffirmed its expectations for 5%-6% organic revenue growth for full year 2025. The company updated its guidance to anticipate a 2%-3% headwind from currency impacts on comparable net revenues, alongside a manageable effect from global trade dynamics. Comparable currency-neutral EPS is projected to grow by 7%-9%, while reported comparable EPS is expected to grow by 2%-3% versus $2.88 in 2024. Free cash flow (excluding the fairlife contingent payment) is targeted at approximately $9.5bn.

The reporting of the results for the first quarter of this year did not bring significant movements on the American market in terms of the price of KO shares, which increased by only +0.78% on the day of the report’s publication. However, since the beginning of this year, despite global uncertainties, the stock price of KO shares has experienced a significant appreciation, by approximately +17% until the time of writing this article, it still remains above the 50-day moving average, while the RSI remains in a normal area, which could continue to give good signals to investors on Wall Street.