Coca-Cola (KO) will report its Q4 2024 earnings on Tuesday, February 11, before the opening bell. Its Q4 performance will provide crucial insights into the business’s continuous development and the success of its most recent initiatives.
Analysts anticipate single-digit bottom-line growth for the beverage giant. Here’s what to expect from the Q4 earnings report.
Source: TradingView
What’s in Focus?
Coca-Cola’s ability to drive sales through price adjustments, new product innovations, and emerging market expansion will be key factors in its performance.
Additionally, cost management remains an important element, as rising company expenses, supply chain challenges, and economic slowdowns in certain regions may have led to reduced profits due to risks. ⁽¹⁾
Another major focus will be Coca-Cola’s performance in international markets, especially in Europe, where weaker consumer demand has affected beverage sales. The impact of shifting consumer behavior, particularly in the convenience store segment, will be analyzed to determine whether Coca-Cola’s brand strength and diversified portfolio can sustain growth. Investors will also watch for management’s forward-looking statements on demand trends and strategic initiatives. ⁽²⁾
Key Focus Areas for Coca-Cola’s Q4 2024 Earnings
- Soft Drinks
Coca-Cola’s core segment, soft drinks, remains its largest revenue driver. The focus will be on volume growth, pricing strategies, and brand performance across global markets. The impact of inflation and change in consumer preference will be key factors, with trends of healthy options towards low sugar or zero-calorie drinks.
- Hydration, Sports, Coffee, and Tea
This segment includes popular brands such as Dasani, Smartwater, Powerade, Costa Coffee, and Gold Peak Tea. Hydration and sports drinks have faced mixed demand, with Coca-Cola looking to focus on functional beverages with added health benefits. The performance of Costa Coffee, especially in international markets, will also be closely monitored as it competes with established coffee chains.
- Juice, Dairy, and Plant-Based Beverages
Coca-Cola’s portfolio in this segment includes Simply, Minute Maid, fairlife, and Innocent. While juice and dairy-based beverages have been stable revenue contributors, shifting consumer habits and cost pressures in the dairy industry could impact margins. Growth in plant-based beverages remains an area of interest as Coca-Cola continues to explore health-conscious alternatives.
- Emerging Alcoholic Beverage Business
Coca-Cola has expanded into alcoholic beverages through partnerships with brands like Jack Daniel’s & Coca-Cola, Topo Chico Hard Seltzer, and Simply Spiked Lemonade. This segment represents a new growing revenue stream, with investors looking for signs of strong consumer adoption and expansion opportunities in global markets. The success of these products could play a role in Coca-Cola’s long-term diversification strategy.
- Regional Performance
Coca-Cola’s revenue is largely affected by regional performance, with key areas of focus including North America’s pricing strategies and market competitiveness, EMEA’s consumer spending trends amid economic challenges, Latin America’s strong pricing power and growth potential, and Asia Pacific’s rising demand in emerging markets like China and India.
- Cost Management and Profit Margins
Rising input costs, supply chain disruptions, and economic uncertainty remain challenges. Investors will focus on Coca-Cola’s ability to manage expenses, maintain profitability, and execute price increases without hurting demand. The company’s gross margin and operating margin trends will be crucial indicators of financial health.
Market Expectations
Wall Street Estimates:
- Earnings Per Share (EPS): $0.52
- Revenue: $10.7 bn
In October 2024, Coca-Cola’s stock declined 2.1% after the release of its Q3 earnings. Despite reporting better-than-expected results with adjusted earnings of $0.77 per share and revenues nearing $11.9 billion, the company experienced a 1% decline in global unit volume.
This was mainly due to slowdowns in key markets like China, Mexico, and Turkey, though the company remains confident in its long-term strategy, focusing on brand growth and operational efficiency. ⁽³⁾
Towards the end of January, Coca-Cola shares took another hit with a 2.4% fall after the company was forced to recall several of its soft drink products in Europe. The recall followed the detection of higher-than-normal levels of chlorate in bottles and cans at a Belgian production plant. In addition to Coca-Cola’s own products, batches of other brands, such as Fanta, Sprite, Minute Maid, and Fuze Tea, were also affected. ⁽⁴⁾
The company is also grappling with rising internal costs and a slowdown in consumer spending, putting pressure on its performance.
Coca-Cola also faces a lawsuit filed by Los Angeles County, accusing the company of contributing to plastic pollution and engaging in deceptive business practices, further adding to its struggles over the past year. ⁽⁵⁾
Despite these challenges, Coca-Cola still remains a dominant player in the beverage industry and showed resilience in its financial performance with its Q3 2024 results, reporting adjusted earnings per share of $0.77, a 4.1% year-over-year increase, with adjusted revenue standing at $11.9 billion, showing a marginal rise from the prior year. ⁽⁶⁾
Investors will be monitoring Coca-Cola’s upcoming earnings report for further insights into the company’s financial health and strategic direction.
