Coca-Cola (KO) logged better-than-expected fiscal fourth-quarter revenue as demand remained strong despite inflation pressures and market volatility, while the snacks and soft drinks company forecasts earnings for 2023 to grow above last year’s result.
Operating revenue for the December quarter advanced 7% to $10.2 billion, driven by a 12% boost from price increases and a 2% gain in concentrate sales, the company said Tuesday. The consensus on Capital IQ was for $9.92 billion. Comparable earnings remained unchanged at $0.45, in line with the Street’s view.
“During the fourth quarter, the environment remained dynamic as inflation, geopolitical tensions, pandemic-related mobility restrictions and currency volatility persisted,” Chief Executive James Quincey said in an earnings call, according to a Capital IQ transcript. “Despite this range of factors, consumer demand held up relatively well, and our industry remains strong.”
Unit case volume, which excludes the impact of currency and price changes, ticked down 1% as growth in Brazil, India, Great Britain and Mexico was more than offset by the suspension of the company’s Russian operations. Soft drinks volume rose 4%, while juice, dairy and plant-based drinks dropped 7%. Volume for water, sports, coffee and tea were flat.
For fiscal 2023, the company anticipates organic revenue growth of 7% to 8%, while foreign currency is expected to dent comparable revenue by 2% to 3%. It also sees comparable profit rising by 4% to 5% on a per-share basis for the fiscal year, including a 3% to 4% foreign-exchange headwind, versus EPS of $2.48 recorded in 2022.
“We expect price/mix to moderate through the year as we cycle our pricing initiatives from the prior year,” Chief Financial Officer John Murphy said on the call. “While the inflationary environment appears to be cooling, we are still expecting to see elevated inflation across our operating costs.” For the current quarter, Coca-Cola projects currency headwinds to weigh on comparable EPS and revenue growth by 6% to 7% and 5% to 6%, respectively.
Last week, Coca-Cola’s soft drinks rival PepsiCo (PEP) also guided for higher fiscal 2023 earnings after its fourth-quarter results topped market estimates.