The Coca-Cola Company has announced its Q3 2023 results, which topped estimates, boosted annual sales and profit forecasts, and showed strong demand and higher prices. 

Net revenues grew 8% to $12.0 billion and organic revenues (non-GAAP) growing 11%. This was primarily driven by a 9% growth in price/mix and a 2% growth in concentrate sales.

 

Sparkling soft drinks, particularly Coca-Cola Zero Sugar, and value-added dairy and plant-based beverages performed well. Considering the impact on consumption from weight-loss drugs, Coca-Cola CEO has expressed focus on this area and acknowledges that there are still differing views on the impact that it may have. Additionally, the company gained value share in total nonalcoholic ready-to-drink (NARTD) beverages, with unit case volume growing 2%. 

Operating margin was 27.4%, down from 27.9% in the prior year, while comparable operating margin (non-GAAP) was 29.7%, down from 29.5% in the prior year. The decline in operating margin was primarily due to items impacting comparability and currency headwinds.

Coca-Cola Co. raised its full- year guidance. It expects to deliver comparable currency neutral EPS (Non-GAAP) growth of 13% to 14% and comparable EPS (Non-GAAP) growth of 7% to 8%. This is due to strong topline growth and the impact of refranchising bottling operations, partially offset by an increase in marketing investments and a currency headwind. 

The company expects organic revenue (Non-GAAP) growth of 10% to 11% for the year, with a projected commodity price inflation to be a mid single- digit percentage headwind on comparable cost of goods sold. Prior organic revenue guidance was 8-9%. 

The company expects to generate Free Cash Flow (Non-GAAP) of approximately $9.5 billion, with capital expenditures of approximately $1.9 billion. 

Overall, Coca-Cola Co. remains optimistic about its performance and is projected to continue repurchasing shares to offset dilution resulting from employee stock-based compensation plans and may also use a portion of the proceeds from nonoperating activities to repurchase additional shares.

Shares of KO rallied 3.1% on the session. The stock was testing its 20-sma ($54.25) ahead of the report, setting up a key showdown. The company was able to outpace top and bottom-line expectations and raised its full year outlook for the second straight quarter. Shares hit $56.17 in intraday trade, its best level since September 29.