Hello everyone,
I participated in the conference call of $KO (+2.3%) (Coca-Cola) fourth quarter and full year 2024 results on Tuesday. James Quincey, the CEO, opened the conference by stating that the 2024 results are encouraging, particularly the volume growth and robust organic sales growth. He highlighted that the company was able to deliver 7% comparable earnings per share growth despite headwinds from currency losses and the impact of the refranchising of bottling operations.
He emphasized that the company's strategy is focused on agility to respond to challenges and continue to deliver earnings per share growth. He also emphasized that Coca-Cola operates in a good industry with steady growth, which opens up numerous business opportunities.
In terms of regional performance, Quincey reported volume growth in ASEAN and the South Pacific, driven by marketing campaigns and affordable refill offers. In China, the company also saw volume growth despite macroeconomic headwinds and improved the performance of brands such as Sprite, Fanta and Minute Maid through increased marketing efforts. Japan and South Korea also saw growth in the quarter, driven by innovation and a strong performance from the Coca-Cola brand. In India, business recovered and consumers were won through marketing campaigns and an expansion of digital customer platforms. In Europe, there was a mixed performance, with different trends in Western and Eastern Europe, but growth in sales and profit was still achieved. In Eurasia and the Middle East, the company returned to volume growth despite headwinds by emphasizing the local focus of the business. In Africa, volumes declined due to challenges in North Africa and Nigeria, but were partially offset by strong momentum in South Africa. In Latin America, volume, sales and profit increased despite macroeconomic pressures, with a focus on digital platforms and single-dose pack offerings. In North America, the company also saw growth in transactions, volume, sales and profit, with the Coca-Cola brand and Fairlife leading the way in retail.
The financial results were also discussed in more detail. In the fourth quarter, organic sales increased by 14%, with sales volume increasing by 2%. Comparable gross margin increased approximately 160 basis points and comparable operating margin increased 80 basis points. Comparable earnings per share were $0.55, an increase of 12% over the prior year.
For 2025, the company expects organic revenue growth of 5% to 6% and comparable currency-neutral earnings per share growth of 8% to 10%.
Various topics were addressed in the subsequent Q&A session. The general assessment of the consumer climate was stable with sustained demand, but with challenges for lower-income groups in developed markets. The importance of pricing was emphasized, with the price/mix expected to normalize somewhat in 2025 as the influence of hyperinflationary countries wanes.
The impact of GLP-1 drugs (weight loss injections) on consumer behavior was also discussed and it was noted that there has not been a major impact on the business to date.
In summary, Coca-Cola has seen a positive performance in 2024 and is confident of achieving its targets for 2025, focusing on its core strategy and investing in growth.
