On Tuesday, February 11th Coca-Cola announced Q4 2024 and full year 2024 results. Revenue of $11.54 billion is in contrast to analyst predictions of $10.77 billion. Adjusted EPS of $0.55 was 6.4% higher than analysts’ consensus estimates. Despite difficult market conditions it is exceeding market expectations across key measures by demonstrating growth in volume and market share.
Following the announcement, premarket trading saw a more than 3% increase in the beverage giant’s shares.
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Coca-Cola (KO) Q4, 2024 Summary
Revenue: $11.54 billion vs analyst estimates of $10.77 billion (5.4% year-on-year growth)
Adjusted EPS: $0.55 vs analyst projections of $0.52 (6.4% beat)
Adjusted EBITDA: $3.27 billion vs analyst estimates of $2.93 billion (28.3% margin, 11.7% beat)
Operating Income: Grew 19% for the Q4 but declined 12% for the fullyear.
Cash Flow from Operations was $6.8 Billion for the Full Year, decrease 41%.
Free Cash Flow (Non-GAAP) was $4.7 Billion for the Full Year, down 51%.
Organic Revenues (Non-GAAP): Grew 14% for the Q4 comparing to 12% for the full year.
Global Unit Case Volume: grew 2% for the Q4 and 1% for the year.
Market Capitalization: $289.14 billion
Coca-Cola (KO) Highlights
Here are the important highlights of company’s quarterly and full 2024-year performance:
Revenues
In the Q4 of 2024, net revenues rose by 6% to reach $11.5 billion, while organic revenues (non-GAAP) saw a 14% increase, fueled by a 9% rise in price/mix and a 5% boost in concentrate sales. For the complete fiscal year, net revenues climbed 3% to $47.1 billion, with organic revenues (non-GAAP) growing by 12%, supported by an 11% increase in price/mix and a 2% uptick in concentrate sales.
Operating margin
In the Q4 of 2024, the operating margin stood at 23.5%, up from 21.0% in Q4 of 2023. For the entire 2024, the operating margin decreased to 21.2% compared to 24.7% in 2023. The comparable operating margin (non-GAAP) improved to 30.0% from 29.1% in 2023. The growth in comparable operating margin (non-GAAP) for both the quarter and the year was mainly fueled by organic revenue (non-GAAP) increases and refranchising of bottling operations. This was somewhat tempered by rising input costs, increased operating expenses, atc. The full year’s operating margin included a $3.1 billion charge from the revaluation of contingent consideration tied to the acquisition of fairlife, LLC in 2020.
Cash Flow
For the entire year, cash flow from operations and free cash flow (non-GAAP) were reported at $6.8 billion and $4.7 billion, respectively. Both figures saw a decline compared to the previous year, primarily resulting from a $6.0 billion payment made to the U.S. Internal Revenue Service (IRS) in relation to ongoing tax litigation. Excluding the IRS tax litigation deposit, free cash flow (non-GAAP) totaled $10.8 billion, reflecting an increase of $1.0 billion over the previous year, largely driven by strong business results and improvements in working capital.
For the Q4, EPS increased by 12% to $0.51, and comparable EPS (non-GAAP) also rose by 12% to reach $0.55. For the full year, EPS slightly decreased to $2.46, while comparable EPS (non-GAAP) experienced a 7% increase to $2.88.
Positive & Negative Performance
Positive
- Q4 Increase in Net Revenues to $11.5 billion.
- Q4 operating margin improved to 23.5% from 21.0%.
- Q4 EPS grew 12% to $0.51.
- Returnable glass bottles added 1.6-billion-unit cases to total company volume performance. This growth rate that outpaced total company volume growth.
- Coca-Cola Zero Sugar grew 13% in Q4 and 9% for full year.
- Sparkling flavors grew 2% for the quarter and 1% for the full year.
- Coca Cola system added more than 250,000 new outlets and close to 600,000 new coolers to expand the consumers.
- Reported increase in market share in nonalcoholic ready-to-drink beverages.
- Reinvesting in the company: In 2024, the company spent $2.1 billion on capital expenditures, an 11% increase from the previous year, and continued to invest in its several business divisions.
- Maintaining dividend growth: In 2024, the firm distributed $8.4 billion in dividends. Over the past 62 years, the corporation has raised its dividend.
Negative
- Full-year operating margin decreased to 21.2% from 24.7%.
- Full-year EPS declined slightly to $2.46.
- Cash flow from operations is down 41% to $6.8 billion.
- Free cash flow falls 51% to $4.7 billion.
- Operating income declined 12% for 2024.
- Plant-based beverages, juice, and value-added dairy products fell 1% during the quarter and remained unchanged throughout the year.
- Water, sports, coffee, and tea saw a 2% quarter-over-quarter growth and a 1% year-over-year decline.
Is It Good To Invest In Coca-Cola Now?
It is impressive the extent to which Coca-Cola exceeded analysts’ EBITDA and EPS projections this quarter. We were also thrilled to see that its organic sales far exceeded Wall Street’s projections. Taking a broad view, we believe that this quarter had several significant positive developments. After reporting, the shares promptly rose 3.45% to $66.78.
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Coca Cola 2025 Expectations
The company reported that anticipates organic revenue growth (non-GAAP) of 5% to 6% in 2025.
Comparable currency-neutral EPS (non-GAAP) is projected to grow by 8% to 10%.
The company expects comparable EPS (non-GAAP) to increase by 2% to 3%, compared to $2.88 in 2024.
Free cash flow, excluding the fairlife contingent consideration payment (non-GAAP), is expected to be approximately $9.5 billion. This is derived from operating cashflow about $11.7 billion, offset by capital expenditures of approximately $2.2 billion.
If you are interested to dig into details, you can listen to the conference call scheduled on February 11th, 2025, at 8:30 am E.T. Recording and transcript will be available on the company’s website within 24 hours following the call. Additionally, the website’s “Investors” section has some additional information as well as a reconciliation of non-GAAP financial measurements to the company’s GAAP-reported results.
