• Comparable Earnings Per Share Growth: 7% growth in 2024 despite currency headwinds and bottler refranchising impacts.
• Organic Revenue Growth: 14% growth in the fourth quarter.
• Unit Case Growth: 2% growth in the fourth quarter.
• Price/Mix Growth: 9% growth driven by pricing actions and favorable mix.
• Comparable Gross Margin: Increased by approximately 160 basis points.
• Comparable Operating Margin: Increased by approximately 80 basis points.
• Fourth Quarter Comparable EPS: $0.55, up 12% year-over-year.
• Free Cash Flow: $10.8 billion in 2024, an 11% increase versus prior year.
• Net Debt Leverage: 1.8 times EBITDA, below the targeted range.
• 2025 Guidance - Organic Revenue Growth: Expected 5% to 6% growth.
• 2025 Guidance - Comparable Currency-Neutral EPS Growth: Expected 8% to 10% growth.
• 2025 Guidance - Free Cash Flow: Expected approximately $9.5 billion.
• Dividend Payout: 73% of adjusted free cash flow in 2024.

• Warning! GuruFocus has detected 5 Warning Signs with TIMB.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Coca-Cola Co (NYSE:KO) achieved a 7% comparable earnings per share growth in 2024 despite currency headwinds and bottler refranchising impacts.
• The company reported robust organic revenue growth of 14% in the fourth quarter, with a 2% increase in unit case growth.
• Coca-Cola Co (NYSE:KO) successfully expanded its global beverage categories, with significant share gains in sparkling soft drinks, value-added dairy, and tea.
• The company is leveraging digital platforms to enhance customer engagement, adding 440,000 outlets to its digital customer platforms in India.
• Coca-Cola Co (NYSE:KO) is investing in innovation, with successful campaigns like Fanta Halloween and the use of generative AI for marketing, contributing to increased retail sales.

Negative Points

• Coca-Cola Co (NYSE:KO) faced volume declines in Europe and Africa, with mixed performance across Western and Eastern markets.
• The company anticipates a 3 to 4 point currency headwind to comparable net revenues and a 6 to 7 point currency headwind to comparable earnings per share for 2025.
• There is pressure from macroeconomic challenges in regions like North Africa and Nigeria, impacting overall volume growth.
• The company expects bottler refranchising to be a slight headwind to comparable net revenues and earnings per share in 2025.
• Coca-Cola Co (NYSE:KO) is facing increased expenses due to elevated marketing and SG&A costs, which may impact profitability.

Q & A Highlights

Q: Can you provide more insight into the consumer environment globally, especially in developed markets like the US and Western Europe? A: James Quincey, CEO, explained that the overall consumer environment is stable with good economic growth globally. In developed markets, lower-income segments face pressure, but the rest of the consumer base is gaining disposable income and spending. Emerging markets show robust consumer demand, with improvements in India, China, and the Middle East. Coca-Cola is focusing on delivering value through marketing, innovation, and affordability to meet consumer needs.

Q: How do you plan to balance volume and pricing in your 2025 organic revenue growth forecast? A: James Quincey noted that the 2025 growth will likely lean more towards pricing than volume, with expected volume growth still present. The company aims for a balance of 2% to 3% in both volume and price over the long term. In 2024, high-inflation countries contributed significantly to price/mix, which is expected to moderate in 2025.

Q: Can you discuss the expected phasing of organic sales growth in 2025 and how it compares to industry growth? A: John Murphy, CFO, mentioned that pricing from inflationary markets is expected to moderate throughout the year. James Quincey added that Coca-Cola aims to gain share, with industry growth expected to normalize. The company anticipates industry growth rates of 4% to 5%, with Coca-Cola targeting the high end of its growth algorithm.

Q: What are the key drivers for margin and profitability progress in 2025, and are there any timing considerations? A: James Quincey highlighted that margin expansion in 2025 will come from marketing and SG&A efficiencies, including the use of generative AI for marketing. John Murphy added that modest gross margin expansion is expected, with low single-digit commodity pressures and currency impacts being managed.

Q: How is Coca-Cola addressing potential impacts from tariffs and changes in the global trade environment? A: James Quincey stated that Coca-Cola's supply chain is largely localized, minimizing exposure to tariffs. The company uses hedging and adjusts sourcing to manage commodity price changes. Despite recent tariffs on aluminum and steel, Coca-Cola remains predominantly a local business, with most products consumed in the US being made domestically.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.