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COCA COLA CO (KO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 results were resilient: net revenues rose 6% to $11.54B (+14% organic) on +9% price/mix and +2% unit case volume; GAAP EPS $0.51 and comparable EPS $0.55, both +12% YoY, despite an ~11-pt FX headwind on comparable EPS .
  • Broad-based execution: North America led with revenue +16% and operating income +29% YoY; Asia Pacific volume +6% but comp currency-neutral OI −6% on higher input/marketing; Bottling volume down 26% on refranchising .
  • 2025 outlook introduced: organic revenue +5–6%; comparable currency-neutral EPS +8–10%; comparable EPS +2–3% vs $2.88, with FX headwinds of ~3–4 pts on revenue and ~6–7 pts on EPS; underlying tax rate guided up to 20.8% (from 18.6%) due to global minimum tax .
  • Cash flow mixed: FY24 free cash flow $4.74B (−51%) due to a $6.0B IRS deposit; free cash flow ex-deposit +11% to $10.78B—an important nuance for cash yield investors .
  • Stock reaction catalysts: clear 2025 EPS framework (including FX/tax headwinds), evidence of pricing moderation with sustained volume, and commentary that aluminum tariff impacts are “manageable” through hedging and packaging mix (limiting cost shock risk) .

What Went Well and What Went Wrong

What Went Well

  • Pricing power and mix held: Q4 organic revenue +14% with +9% price/mix; concentrate sales +5% and three points ahead of unit cases due to two extra days and shipment timing .
  • North America strength: Q4 revenue +16% and operating income +29% YoY, driven by pricing actions, favorable mix, and Coke Trademark momentum; comp currency-neutral OI +26% .
  • Portfolio wins: Coca‑Cola Zero Sugar +13% volume in Q4; Sparkling flavors +2%; management: “Our all‑weather strategy is working… we continue to demonstrate our ability to lead through dynamic external environments” (James Quincey) .

What Went Wrong

  • FX/tax headwinds: Q4 comparable EPS absorbed an ~11-pt currency headwind; FY25 underlying tax rate to 20.8% from 18.6% in 2024, pressuring reported EPS growth .
  • Asia Pacific profitability: Q4 comp currency-neutral OI −6% as organic growth was offset by higher input costs and marketing; price/mix −5% on unfavorable mix .
  • Bottling Investments/volume: Bottling unit case volume −26% due to refranchising; full‑year free cash flow reported down 51% from IRS $6.0B deposit (optically negative without ex‑deposit lens) .

Financial Results

Headline P&L trends (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Net Operating Revenues ($B)$12.36 $11.85 $11.54
GAAP EPS ($)$0.56 $0.66 $0.51
Comparable EPS ($)$0.84 $0.77 $0.55
Operating Margin (GAAP)21.3% 21.2% 23.5%
Operating Margin (Comparable)32.8% 30.7% 24.0%
Organic Revenue Growth YoY (%)+15% +9% +14%
Price/Mix YoY (%)+9% +10% +9%
Unit Case Volume YoY (%)+2% −1% +2%

Segment breakdown – Q4 2024

SegmentRevenue ($MM)YoY %Operating Income ($MM)YoY %
Europe, Middle East & Africa$1,791 +6% $816 +2%
Latin America$1,643 +10% $985 +24%
North America$4,679 +16% $1,174 +29%
Asia Pacific$1,216 +9% $388 +24%
Global Ventures$850 +5% $135 +14%
Bottling Investments$1,551 −23% $199 +8%
Corporate/Elims$22 / $(208) −31% / +40% $(988) −16%
Total$11,544 +6% $2,709 +19%

KPIs (Q4 2024 category/unit case growth YoY)

KPIQ4 2024
Unit Case Volume (Total)+2%
Sparkling Soft Drinks+2%
Coca‑Cola Trademark+2%
Coca‑Cola Zero Sugar+13%
Sparkling Flavors+2%
Juice, Value‑added Dairy & Plant−1%
Water+2%
Sports−2%
Coffee−1%
Tea+5%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue (Non‑GAAP)FY 2025n/a+5% to +6% New
Comparable Net Revenues: FX ImpactFY 2025n/a(3%) to (4%) headwind New
Underlying Effective Tax Rate (Non‑GAAP)FY 2025n/a20.8% vs 18.6% in 2024 New
Comparable Currency‑Neutral EPSFY 2025n/a+8% to +10% New
Comparable EPS (vs $2.88 in 2024)FY 2025n/a+2% to +3% New
Comparable EPS: FX ImpactFY 2025n/a(6%) to (7%) headwind New
Free Cash Flow ex fairlife paymentFY 2025n/a≈$9.5B (CFO ex-payment ≈$11.7B; capex ≈$2.2B) New
Comparable Net Revenues: FX impactQ1 2025n/a(3%) to (4%) headwind + (2%) to (3%) structural headwind New
Comparable EPS: FX/structural impactQ1 2025n/a(5%) to (6%) FX + (2%) to (3%) structural headwind New
Reporting CalendarQ1 2025n/aTwo fewer days vs Q1 2024 New

Earnings Call Themes & Trends (Q2 → Q3 → Q4)

TopicQ2 2024 (Jul)Q3 2024 (Oct)Q4 2024 (Feb)Trend
AI/TechAI in marketing (Olympics), RGM/AI pricing pilots; product dev insights NVIDIA/WPP gen‑AI creative at scale; digital price‑pack optimization Gen‑AI Christmas ad cut cost/time; continued marketing productivity Expanding deployment/impact
Supply Chain/CommoditiesStable industrials; ag vols persist ’25: low‑single digit commodities; agri (juice/coffee) up Aluminum tariffs manageable via hedging/pack mix; supply continuity priority Manageable; focused mitigation
Pricing/ElasticityPrice/mix +9%; intense inflation markets ~5 pts Price/mix +10%; mix aided by developed mkts ’25: moderation; more price than volume but both positive Normalizing
Product PerformanceCoke TM/Fuze Tea/Powerade momentum Fairlife/TM Coke leading retail dollars; Sparkling growth Zeros and flavors strong; fairlife growth to moderate pending new capacity Sustained, with fairlife capacity gating
Regional TrendsLatAm/India/Philippines strength; NA price/mix Developed mkts improved; EM pressure (Eurasia/China; Mexico cycling) NA strong; APAC mixed; LatAm robust; EMEA stable; Asia comp CN OI −6% Balanced; APAC profitability watch
Regulatory/Legal—$6B IRS deposit (appeal filed) Underlying tax rate +; GLP‑1 impact minimal Tax headwind quantified
Alcohol RTD—Bacardi Mix with Coke announced for 2025 Portfolio approach (Jack&Coke, Absolut&Sprite, Simply Spiked) In test/scale phase

Management Commentary

  • “Our all‑weather strategy is working, and we continue to demonstrate our ability to lead through dynamic external environments.” — James Quincey, Chairman & CEO .
  • “We expect organic revenue growth of 5% to 6% and comparable currency‑neutral EPS growth of 8% to 10% in 2025… underlying effective tax rate to 20.8%… FX headwinds ~3–4 pts (revenue) and ~6–7 pts (EPS).” — John Murphy, President & CFO .
  • On aluminum tariffs: “Manageable… combination of hedging, supply chain/sourcing, can weight, and packaging mix (e.g., PET) … not a huge swing factor.” — James Quincey .
  • On pricing/volume in 2025: Expect both positive, “a little more price and a little less volume” vs long‑term balance, as high‑inflation pricing largely drops out .

Q&A Highlights

  • Macro/consumer: Management sees global demand as “pretty stable,” with lower‑income pressure in developed markets offset by broader spending; EM demand robust in aggregate .
  • 2025 revenue algorithm: Organic +5–6%, more price than volume but continued volume growth; intense inflation pricing to moderate; phasing suggests tougher Q2 .
  • Margins: Modest gross margin expansion in guidance; marketing productivity (gen‑AI, resource allocation) to support underlying margin despite FX/tax headwinds .
  • Input costs/tariffs: Aluminum tariff effects mitigated via hedging and packaging mix; supply continuity remains a focus across markets .
  • GLP‑1: Minimal aggregate impact on non‑alcoholic beverages; total beverage portfolio can adapt mix to consumer shifts .
  • Fairlife: Brand well over $1B; growth to moderate near‑term pending NY plant capacity ramp; mix benefit normalizes in 2025 .

Estimates Context

  • We attempted to retrieve S&P Global consensus estimates for Q4 2024 (EPS, revenue, EBITDA), but access was unavailable due to rate limits; therefore, we have not included vs-consensus comparisons. We will update the recap with S&P Global consensus when available (S&P Global access constraint) [GetEstimates error].

Key Takeaways for Investors

  • Pricing durability with stable elasticities: Q4 organic +14% on +9% price/mix and +2% volume supports confidence in monetization while volume remains positive .
  • North America is a key profit engine near‑term; watch APAC profitability where comp currency‑neutral OI dipped on mix/marketing .
  • 2025 EPS bridge is transparent: underlying growth +8–10% currency‑neutral, offset by ~6–7 pts FX and a higher 20.8% tax rate; reported comparable EPS +2–3% implies limited multiple risk if FX improves .
  • Cash yield optics are better than GAAP suggests: free cash flow ex‑IRS deposit +11% to $10.78B; management targeting ≈$9.5B FCF ex‑fairlife payment in 2025 .
  • Tariff/commodity risk manageable: management sees aluminum cost impact as mitigable; agri commodity inflation (juice/coffee) remains the more material watch item .
  • Innovation and AI‑enabled marketing underpin share gains; evidence of cost‑effective campaigns and elevated cooler placements (~600k added in 2024) to drive transactions .
  • Near‑term setup: Q1 has two fewer days and FX headwinds; stronger H2 productivity benefits expected, suggesting potential intra‑year acceleration in 2025 .