Coca-Cola on Wednesday reported a dip in overall revenues in the third quarter, but a solid rise in “organic” sales, that is, operations that can be compared to a year ago.
The Atlanta-based beverage giant reported sales of $11.95 billion for the three months ending Sept. 27, a decline of 1% from the same period a year ago, while its overall operating profit margin narrowed and net income dropped.
Coca-Cola’s net income for the quarter was $2.85 billion, down 8% from the third quarter a year earlier. Earnings per share were 66 cents, down 7% from the previous year.
But organic revenues were up 9%, and earnings per share and the results were slightly better than expected by industry analysts.
The slippage in sales is temporary, said James Quincey, the company’s chairman and chief executive officer.
“We think it will work itself out,” he said during a Wednesday morning interview with CNBC. “We’ll be back to volume growth and a stronger top line going into next year.”
Coca-Cola’s business is global, and the company is something of a bellwether for the global economy. The company said it saw fewer sales overall because of a monsoon in India, as well as the ongoing crises in the Middle East.
“Yes, some countries are doing better than others, but the overall consensus is that there’s pretty good resilience,” Quincey said. “Ongoing moderation, I think, is the key message.” The outlook remains positive, he said. “We will continue to grow the industry and to grow share within it.”
The company said it is prioritizing “growing brands across categories that add incremental system profit over the long term.”
Trouble in the Middle East has suppressed Coca-Cola sales there, while storms hindered business in India.
“It was Coke’s developed markets, including the U.S., that carried the quarter,” said Duane Stanford, editor and publisher of Beverage Digest. “This is the kind of mixed-bag global market landscape that allows Coke executives to show off the company’s “all-weather” strategy.”
Coca-Cola might have made its name with Coke, but it now has a dozen different brands in water, sports and tea categories that each are bringing in more than $1 billion a year, according to a statement from the company.
Sales of “Trademark Coca-Cola,” which includes every drink branded “Coke,” were about even with last year, according to the company. However, Coca-Cola Zero Sugar grew 11%.
Sales of Coca-Cola’s juice, dairy and plant-based beverages declined 3%, although sales of Fairlife were strong.
Water, sports, coffee and tea drinks declined 4% and water declined 6%. Sports drinks declined 3%. Tea grew 7%.
The company is increasingly looking to artificial intelligence as a tool, especially for marketing, he said.
Shares of Coca-Cola slipped in early trading on release of the quarterly report, but had rallied a bit to more than $68 per share by midafternoon.
That compares to an all-time high just over $73 a share in early September. The stock’s trend has been generally upward since it dipped below $53 in October 2023.
Analyst Garrett Nelson of CFRA said he was lowering his target price for the company from $72 to $70 a share. He recommended that clients who are invested in Coca-Cola hold on to their shares, but he did not recommend purchasing more.
Several factors will be headwinds for growth, including currency values in some countries that depress profits, he said.
Despite the intensity of the current political campaign, Quincey told CNBC that while some economists speculate about consumer uncertainty, the company has not seen any retreat as the U.S. presidential election approaches.
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