Coca-Cola Co raised its full-year revenue projection, boosted by buoyant demand for sugary sodas in the face of price rises to offset higher expenses.
According to the company, global sales volumes increased by 8% in the second quarter, driven by growth in both developed and emerging regions, while average selling prices jumped by roughly 12 per cent.
In early trading, the Dow component’s shares were up 2.2 per cent, while the broader market was down after major U.S. retailer Walmart Inc dropped its full-year profit forecast due to a slowdown in discretionary spending.
“Coke’s results are testament to its brand value because consumers are unwilling to trade down to other colas, despite increasing prices,” CFRA analyst Garrett Nelson said.
The findings show the resiliency of packaged food manufacturers, particularly in the United States, as consumers prioritise spending on eating at home over eating out.
Coca-Cola CEO James Quincey stated that the corporation will raise prices further in markets where expenses were rising, with the goal of passing the majority of them on to consumers before a potential recession.
PepsiCo Inc, a competitor, expressed similar sentiments last week. The corporation stated that there has been no slowdown in demand and that there is still room for pricing to rise further.
Coca-Cola was preparing for a downturn by investing in smaller and less expensive packaging, according to Quincey, but the company’s goods have historically been among the last to notice a decrease in demand during recessions.
According to Refinitiv IBES statistics, net revenue increased 12 per cent to $11.3 billion in the quarter ended July 1, exceeding analysts’ forecasts of $10.55 billion.
Nonetheless, the data demonstrated the impact of rising costs. Comparable operating margin decreased from 31.7 per cent to 30.7 per cent.
Organic revenue, which excludes the impact of a higher currency, is forecast to expand by 12 per cent to 13 per cent in 2022, up from a previous estimate of 7 per cent to 8 per cent.
(Adapted from EuroNews.com)