Coca Cola $KO (+1.89%)
In a half-year characterized by geopolitical tensions, consumer restraint and currency fluctuations, Coca-Cola delivers solid results.
Coca Cola $KO (+1.89%) is the smallest single stock in my portfolio, but I intend to expand it as a dividend stock and anchor in the long term.
In this article you will find everything you need to know as an amateur investor. The basis is the current Earnings Release [1] and the Earnings Call [2].
Market reaction despite good figures currently rather negative, perhaps more was expected, especially after the good figures from Pepsi $PEP (+1.93%) last week with a reaction of +7%.
First to understand:
GAAP vs. non-GAA
Coca-Cola publishes two types of financial figures:
GAAP (reported): According to US accounting standards including special effects.
Example Q2 2025: Reported sales are USD 12.64 billion, influenced by the sale of bottling plants (refranchising) and negative currency effects.
non-GAAP (adjusted): Without distorting one-off effects, meaningful for investors
- Organic sales growth of +7% is a realistic view of the operating business
Financial overview Q2 2025
Sales (reported/GAAP): USD 12.64 bn (+2 %)
- Including currency effects and structural changes such as the sale of bottling plants
- This is the "official" turnover according to accounting (GAAP)
Organic sales growth (non-GAAP): +7 %
- Adjusted for currency effects & structural changes
- Shows how strongly the core business is really growing - without distortions
EPS (earnings per share, reported/GAAP): 0.78 USD (+1 %)
- Earnings per share including all special and one-off effects
Adjusted EPS (non-GAAP): 0.74 USD (±0 %)
- Shows the operating earnings per share, excluding one-off effects, important for the sustainable assessment
Sales volume (unit case volume): +1 %
- Coca-Cola has sold more beverages, which shows that there is also real demand
- One "unit case" corresponds to about 24 small bottles, measured by volume sold, not revenue
Price-mix growth: +6 %
- Sales growth also came from price increases and a higher proportion of more expensive products
- Example: More zero sugar or premium variants such as Coca-Cola Orange Cream
💼 Focus on operating profitability
Operating profit (reported/GAAP): +5 %
- Despite inflation, taxes and currency effects, Coca-Cola was able to generate more operating profit
- Reason: good price management, product mix & cost discipline
Operating margin (reported): 30,6 %
- For every dollar of sales, 30.6 cents remain as operating profit
- A very strong figure, typical for asset-light companies like Coca-Cola
Adjusted operating margin (non-GAAP): 32,6 %
- Previous year: 32,8 %
- Despite slight decline, Coca-Cola remains highly profitable, important benchmark for investors
In a nutshell:
Coca-Cola delivers in Q2 2025:
- Stable sales growth despite difficult conditions
- high profitability with over 30% operating margin
- Real volume growth plus price strength
- still little susceptible to economic fluctuations
📦 What is "unit case volume"?
Coca-Cola measures sales volume in "unit cases":
One "case" equals 24 8-ounce servings.
- This metric shows how much was sold in real terms, regardless of price.
CEO James Quincey
"We grew volume and value share during the quarter despite continued macroeconomic pressure."
The fact that volume is up by 1% is a solid sign in an environment of subdued consumption. Consumers drink Coca-Cola products despite inflation and reluctance to buy
EXCURSE:
In recent years, Coca-Cola has sold many of its own bottling plants to independent partner companies, a process known as "refranchising".
Why?
- Coca-Cola wants to concentrate more on brand management, formulation and marketing, not on expensive production and logistics.
- The bottlers take over production, packaging and distribution, while Coca-Cola collects license fees and sells concentrates.
What does this mean for the figures?
- When Coca-Cola sells a bottling plant, its sales are removed from the balance sheet, which can cause reported sales to fall, even if the business is doing well.
- Organic sales are therefore adjusted to show how the core business is really developing.
🌍 Regions
EMEA = Europe, Middle East & Africa
Burdened by the strong US dollar, weak consumer sentiment in parts of Europe & unstable markets in Africa.
"We faced softness across certain African markets and some Western European countries."
... in case you were also wondering why exactly these regions (Europe, Middle East & Africa) are grouped together?
Operational management at Coca-Cola is based on regions with comparable logistics markets, not a geographical coincidence.
North America
- ±0 % volume, but operating margin +3 %
Stable market, but:
James Quincey:
"Consumer sentiment weakened as the quarter progressed, especially among Hispanic consumers."
Latin America
- +3% volume, strong price mix
Brazil & Mexico drive growth, even with difficult inflation.
James Quincey:
"We successfully executed pricing strategies in Brazil, with resilient consumer demand."
Asia-Pacific
- +1 % volume, India as highlight
In India, 350,000 points of sale were added: kiosks, supermarkets, restaurants, etc.
James Quincey:
"We added 350,000 outlets and increased household penetration significantly."
Classification:
These "outlets" are e.g. kiosks, restaurants, supermarkets.
The number is large, but India is a huge market, the growth means: more availability and visibility of the brand in the everyday life of consumers.
Household penetration means that more households are regularly consuming Coca-Cola products.
🥛 What actually is fairlife...
- fairlife is a US dairy subsidiary with a focus on high-protein dairy products
- Coca-Cola took over the brand completely in 2024
- According to Call, the brand is developing well, but growth is currently slowing down slightly as capacity is being expanded
John Murphy (CFO):
"fairlife continues to deliver strong performance. We expect growth to moderate ahead of new capacity coming online."
Meaning:
- fairlife can become a strong source of cash in the medium term, comparable to Monster Energy, but in the "better-for-you" segment.
"We're seeing strong traction with our better-for-you offerings that tap into the energy category, combining functionality with wellness"
Product highlights: what's going well, what's not so much
Coca-Cola has long been more than just a red can. The Group sells over 200 brands in more than 200 countries, including
- classic soft drinks (Coca-Cola, Sprite, Fanta)
- Water & sports drinks (e.g. Smartwater, Powerade)
- Coffee & tea (Costa, Fuze Tea, Ayataka)
- Dairy products & plant-based alternatives (fairlife, AdeS)
- Alcoholic drinks (Topo Chico Hard Seltzer, Jack Daniel's & Coca-Cola Mix)
What went particularly well in Q2?
Coca-Cola Zero Sugar
- Continued growth driver worldwide
- Particularly strong in North America, India and Japan
- Positioned as a healthier counterpart to classic Coke
James Quincey:
"Coke Zero Sugar continued to grow globally and win market share."
Fanta & Sprite
- Fanta with strong growth thanks to new campaigns
- Sprite with comeback in China (after declines in the previous year)
Ayataka (green tea)
- Particularly popular in Japan & South Korea
- Strong volume growth in Q2
fairlife (protein milk)
- Continued very good development - however, growth temporarily slowed due to production bottlenecks
- Target: expansion of production capacity by 2026
Simply Pop (new prebiotic soda)
- Market launch in the USA in February 2025
CFO John Murphy:
"Simply Pop is off to a strong start in key retail channels."
Topo Chico (mineral water & hard seltzer)
- Remains a niche growth driver, especially among younger consumers
James Quincey:
"Topo Chico continues to resonate with the next generation of consumers."
Innovation & Marketing: Coca-Cola 2025
- "Studio X": internal digital agency that rolls out customized campaigns globally at lightning speed
- "Share a Coke" 2025 is back - with a focus on Gen Z, digital experiences & personalization
- Connected packaging: QR codes on bottles link to exclusive content & competitions
- "Hecho en México" campaign in Latin America: aims to strengthen trust and locality
⚠️ Risks and challenges and how Coca-Cola is responding
1 . Consumer sentiment remains fragile
- The call explicitly refers to reluctance to buy in North America
- Particularly affected: Hispanic consumers and lower-income groups
2 . Currency pressure
- The strong dollar depresses profits from emerging markets
- EMEA, Africa & Latin America particularly affected
A strong US dollar makes international sales in local currency less valuable when converted back into USD.
John Murphy:
"Currency headwinds could impact EPS by up to 6 percentage points in 2025."
🇲🇽 Example1 Coca-Cola in Mexico brings in pesos, but when the dollar is strong, less profit remains in USD
3 . Commodity costs & wages
- Commodity prices (sugar, aluminum, plastic) rise slightly again
- Labor costs rise, especially in North America and Western Europe
No direct pressure on margins at present, but Coca-Cola remains vigilant
4 . fairlife growth delay
- Production capacities must be expanded in order to serve new markets
- Until then: slower growth before a new push comes
Concluding quotes from the earnings call
CEO James Quincey
"We delivered volume growth and organic revenue growth at the high end of our long-term algorithm."
- In Q2 2025, Coca-Cola achieved exactly the targets it had set itself for the long term, despite headwinds (e.g. weak economy, currency effects).
- "Long-term algorithm" refers to the growth targets set internally: around 5-6% organic sales growth, 7-9% profit growth (non-GAAP) per year.
"Our system is adapting quickly and creating enduring value even in volatile markets."
- The strength of the Coca-Cola system (group + independent bottlers) is emphasized here. Coca-Cola can also react quickly to inflation, wars or geopolitical uncertainty, e.g. through price adjustments, local campaigns or product innovations.
Quincey's message to investors: "Don't worry our system is crisis-tested and robust.
CFO John Murphy:
"Comparable EPS was flat year-over-year despite currency headwinds and a higher effective tax rate."
- Adjusted earnings per share (comparable EPS) did not fall, although currency effects (strong dollar) reduced profits abroad
- The tax rate (i.e. the percentage that Coca-Cola has to pay to the tax authorities) has increased
- This should show: "Even with headwinds, we deliver stable results."
"We're confident in our 2025 guidance and continue to execute our all-weather strategy."
- The famous "all-weather strategy" stands for Coca-Cola's ability to deliver predictable and stable results even in stormy and rainy weather (economic crises, etc.).
- "Guidance" refers to the outlook for the current year, here the CFO says: "We are sticking to our targets, no correction necessary.
✅ Conclusion: Coca-Cola... boring, but profitable
Coca-Cola does not deliver any growth fantasy, but no nasty surprises either.
In a globally fluctuating environment, the Group remains reliable, profitable and broadly positioned.
- The dividend is secure.
- The brand power is intact.
- Pricing is working (6% price-mix growth!).
- Sales continue to grow in emerging markets.
My assessment:
📊 Coca-Cola remains a robust basic investment for dividend investors.
Not spectacular, but that is precisely what makes it attractive in uncertain times.
Comment Wallstreet Online
"The US bank JPMorgan has left its rating for Coca-Cola at "Overweight" with a target price of 77 US dollars. The quarterly result topped expectations thanks to a solid margin, wrote Andrea Teixeira on Tuesday. The stable growth and the currency-related increased forecast should be sufficient for further outperformance of the shares"
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Thanks for reading! 🤝
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Sources:
[1] https://investors.coca-colacompany.com/_assets/_d2d15570a4df8e28627ac187d47e62d2/cocacolacompany/db/880/11064/earnings_release/Coca-Cola+2025+Q2+Earnings+Release_Full+Release_7.22.25.pdf
[2] https://web.quartr.com/link/companies/4595/events/339526/transcript?targetTime=0.0