Coca-Cola Q1 Earnings: Organic Revenue Up 6%, Global Volume Grows 2%

Rhea-AI Summary

Coca-Cola reported mixed Q1 2025 results with global unit case volume growing 2% while net revenues declined 2%. The company achieved organic revenue growth of 6%, driven by a 5% increase in price/mix and 1% growth in concentrate sales.

Key performance metrics include:

• EPS grew 5% to $0.77
• Operating margin improved to 32.9% from 18.9%
• Cash flow used in operations was $5.2 billion

Regional highlights show strong performance in developing markets, with India, China, and Brazil leading growth. Notable achievements include record-breaking activation at India's Maha Kumbh Mela festival and successful Lunar New Year campaigns in China. Coca-Cola Zero Sugar showed remarkable growth of 14% across all segments.

The company maintains its 2025 outlook, expecting organic revenue growth of 5-6%, with a projected 2-3% currency headwind impact on comparable net revenues.

Positive

• Global unit case volume grew 2% led by India, China and Brazil
• Organic revenues grew 6% with 5% growth in price/mix
• Operating margin improved to 32.9% from 18.9% year-over-year
• EPS grew 5% to $0.77 despite currency headwinds
• Coca-Cola Zero Sugar showed strong growth of 14% across all segments
• Gained value share in total nonalcoholic ready-to-drink beverages
• Strong performance in emerging markets with double-digit growth in India and China

Negative

• Net revenues declined 2% to $11.1 billion
• Free cash flow declined by $5.7 billion year-over-year
• North America unit case volume declined 3%
• Negative free cash flow of $5.5 billion due to fairlife contingent payment
• 5-point currency headwind impacting financial performance
• Coffee sales declined 2% globally
• Bottling Investments segment saw 17% volume decline

Insights

Financial Analyst

Coca-Cola delivered strong 6% organic revenue growth and substantial margin expansion despite currency headwinds, showcasing operational resilience through geographic diversification.

Coca-Cola's Q1 2025 results demonstrate the strength of its globally diversified business model amid challenging market conditions. While reported revenue declined 2% to $11.1 billion, organic revenue grew 6% (5% price/mix, 1% concentrate volume), highlighting robust underlying demand and pricing power. The company achieved remarkable operating margin expansion to 32.9% from 18.9% year-over-year, with operating income surging 71%.

Geographic performance varied significantly, creating a natural hedge against regional weaknesses. Developing markets showed notable strength with India and China delivering strong growth, while North America volume declined 3%. This geographic diversification proved advantageous in navigating macroeconomic challenges.

Free cash flow turned negative at $5.5 billion, though this was primarily due to a one-time $6.1 billion contingent consideration payment related to the fairlife acquisition. Excluding this payment, free cash flow would have been positive at $558 million.

The maintained full-year organic revenue growth guidance of 5-6% signals management confidence in the business trajectory despite increased currency headwinds (now expected to be a 2-3% drag on comparable net revenues). This consistent outlook amid external challenges underscores the resilience of Coca-Cola's business model.

Consumer Goods Industry Specialist

Coca-Cola's portfolio strategy shows resilience with Coke Zero Sugar growing 14% and strong emerging market performance offsetting developed market challenges.

Coca-Cola's Q1 results reveal the effectiveness of its portfolio and geographic diversification strategies in a complex market environment. The standout performer was Coca-Cola Zero Sugar, growing 14% globally, demonstrating successful innovation addressing health-conscious consumer trends. Category performance was mixed but generally positive with sparkling soft drinks up 2%, water increasing 3%, and juice/dairy growing 1%.

The company's localized approach in developing markets is yielding impressive results. Innovative marketing during India's Maha Kumbh Mela festival drove over 180 million servings, while the "Made in, Made by" campaign in Türkiye highlighting local production contributed to double-digit volume growth. These successes helped offset challenges in developed markets, particularly North America.

Product innovation remains a strategic priority, with the launch of Simply Pop prebiotic soda in select U.S. markets and continued growth of specialized products like fairlife ultra-filtered milk. These initiatives demonstrate Coca-Cola's agility in adapting its portfolio to evolving consumer preferences while maintaining strong market positions.

The divergence between developed and developing markets highlights both challenges and opportunities. While North American volume declined, emerging markets with larger population bases showed robust growth. This geographic balance enabled Coca-Cola to deliver 2% global volume growth despite headwinds, validating its "all-weather strategy" as described by CEO James Quincey.

Coca-Cola Reports Mixed Q1 2025 Results: Revenue Dips 2% While Operating Income Surges 71%

Coca-Cola Company (KO) reported its first quarter 2025 financial results on April 28, showing the beverage giant navigating a complex global environment with mixed results. While net revenues declined 2% to $11.1 billion, the company posted significant growth in operating income and maintained its full-year organic revenue growth outlook.

The Atlanta-based soft drink manufacturer saw its global unit case volume increase by 2% during the quarter, led by strong performance in India, China, and Brazil. However, currency headwinds and the impact of refranchising bottling operations contributed to the overall revenue decline.

"Our performance this quarter once again demonstrates the effectiveness of our all-weather strategy," said James Quincey, Chairman and CEO of The Coca-Cola Company, in the press release. "Despite some pressure in key developed markets, the power of our global footprint allowed us to successfully navigate a complex external environment."

Financial Performance Highlights

While reported net revenues fell 2%, organic revenues (non-GAAP) grew 6%, including 5% growth in price/mix and a 1% increase in concentrate sales. The company noted that concentrate sales were 1 point behind unit case volume, primarily due to two fewer days in the quarter, partially offset by the timing of concentrate shipments.

Operating income saw a substantial 71% increase, with operating margin expanding to 32.9% from 18.9% in the prior year. On a comparable basis, operating margin was 33.8% versus 32.4% in the prior year. The company attributed margin expansion to organic revenue growth, effective cost management, the timing of marketing investments, and the impact of refranchising bottling operations, partially offset by currency headwinds.

Other key financial metrics for Q1 2025 included:

• Earnings per share (EPS) grew 5% to $0.77, including the impact of a 9-point currency headwind
• Comparable EPS (non-GAAP) grew 1% to $0.73, including the impact of a 5-point currency headwind
• Cash flow used in operations was $5.2 billion
• Free cash flow (non-GAAP) declined approximately $5.7 billion versus the prior year

The company noted that the cash flow decrease was primarily due to a $6.1 billion contingent consideration payment made during the quarter in conjunction with the 2020 acquisition of fairlife, LLC. Free cash flow excluding this payment was $558 million.

Regional Performance

Coca-Cola's results varied significantly across its geographic segments:

Europe, Middle East & Africa: Unit case volume grew 3%, primarily driven by growth in Trademark Coca-Cola and sparkling flavors. Price/mix grew 6%, while operating income declined 1%, impacted by a 9-point currency headwind. The company gained value share in total nonalcoholic ready-to-drink beverages in this region.

Latin America: Unit case volume was even, as growth in Trademark Coca-Cola and water, sports, coffee and tea was offset by a decline in sparkling flavors. Price/mix grew 16%, while operating income declined 4%, impacted by a 22-point currency headwind.

North America: Unit case volume declined 3%, primarily driven by declines in Trademark Coca-Cola and water, sports, coffee and tea. Despite this, price/mix grew 8%, and operating income surged 170%, though this included items impacting comparability.

Asia Pacific: Unit case volume grew 6%, driven by growth across all global beverage categories. Price/mix declined 1%, and operating income fell 5%, which included an 11-point currency headwind.

Bottling Investments: Unit case volume declined 17%, largely due to the impact of refranchising bottling operations. Operating income declined 24%.

Product Category Performance

According to the release, sparkling soft drinks grew 2% globally, with Trademark Coca-Cola growing 1%. Coca-Cola Zero Sugar continued its strong momentum with 14% growth across all geographic operating segments. Juice, value-added dairy and plant-based beverages grew 1%, while water, sports, coffee and tea collectively grew 2%.

The company highlighted its innovation efforts, including the continued strong volume growth of fairlife products, which include lactose-free ultra-filtered milk and high-protein offerings. Coca-Cola also noted the launch of Simply Pop, its first prebiotic soda, in select regions and channels across the United States.

Market Share Gains

The company reported gaining value share in total nonalcoholic ready-to-drink beverages during the quarter. It also extended its global leadership position in the ready-to-drink tea category, delivering share gains in both volume and value.

Outlook for 2025

Coca-Cola maintained its full-year 2025 organic revenue growth guidance of 5% to 6%. However, the company updated its outlook for comparable net revenues, now expecting a 2% to 3% currency headwind based on current rates and including the impact of hedged positions, in addition to a slight headwind from acquisitions, divestitures and structural changes.

The company emphasized its focus on developing and emerging markets, where approximately 80% of the world's population resides, highlighting successful marketing activations during events such as the Maha Kumbh Mela festival in India and Lunar New Year in China.

This article is based solely on information provided in Coca-Cola Company's press release dated April 28, 2025. The content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. Stock Titan and its writers make no representations as to the accuracy, completeness, or timeliness of the information. Investors should conduct their own due diligence before making any investment decisions.

Source: Coca-Cola Company

FAQ

How much did Coca-Cola (KO) earnings grow in Q1 2025?

Coca-Cola's EPS grew 5% to $0.77 in Q1 2025, while comparable EPS (non-GAAP) grew 1% to $0.73, including a 5-point currency headwind.

What was Coca-Cola's (KO) revenue performance in first quarter 2025?

Coca-Cola's net revenues declined 2% to $11.1 billion in Q1 2025, though organic revenues grew 6%, driven by 5% growth in price/mix and 1% increase in concentrate sales.

How did Coca-Cola Zero Sugar perform in Q1 2025?

Coca-Cola Zero Sugar showed strong growth of 14% in Q1 2025, with growth across all geographic operating segments.

What is Coca-Cola's (KO) organic revenue growth guidance for 2025?

Coca-Cola expects to deliver organic revenue growth of 5% to 6% for full year 2025.

How did Coca-Cola (KO) perform in emerging markets like India and China in Q1 2025?

Coca-Cola saw strong performance in emerging markets, with India and China leading unit case volume growth. China achieved high single-digit volume growth, while India delivered double-digit volume growth.