(Bloomberg) -- Coca-Cola Co. raised its full-year outlook as higher prices bolstered the soft-drink giant’s performance.
The Atlanta-based company now sees organic revenue growth, which strips out currency volatility and other items, in a range of 9% to 10% this year, above the previous projection in April for 8% to 9%.
The maker of Fanta sodas, Minute Maid juices and Powerade sports drinks reported that organic revenue, which excludes the impact of currency shifts and acquisitions, rose 15% in the period, well above the 9.4% average estimate of analysts.
Revenue was $12.3 billion in the second quarter, above the average analyst estimate, while earnings per share of 84 cents surpassed expectations for 81 cents. Comparable operating margin was 32.8%, compared with 31.6% a year earlier.
“Consumer sentiment, in the aggregate, is actually pretty strong,” said Chief Executive Officer James Quincey. Speaking on a call with analysts, he said that the increase in price mix was heavily impacted by the inflationary environment in countries such as Argentina, but otherwise the company sees inflation pressures waning.
“I think the Coca-Cola story is shifting, with EPS growth being driven more by margin expansion from moderating cost pressures versus the price increases which have been the primary driver in recent quarters,” CFRA analyst Garrett Nelson, said in an email.
Coca-Cola shares rose 1.4% at 9:32 a.m. in New York on Tuesday. The stock had risen nearly 10% so far this year through Monday’s close, short of the S&P 500 Index’s gain.
While consumers have begun to resist higher prices on some grocery items, Coca-Cola has continued to increase prices for its beverages. Averaged across regions, the company hiked prices across a mix of its products by 9%, more than the 8% price mix increase expected by analysts. Prices rose 11% in North America.
Globally, Coca-Cola’s total unit case volume was up 2%, matching estimates, though it declined 1% in North America.
The results contrast with those from Coca-Cola’s main rival, PepsiCo Inc., which earlier this month reported weaker-than-expected revenue growth as its snack-food business was hurt by increasingly budget-focused shoppers.
CFRA’s Nelson said by email that while the snacks business helped to buoy PepsiCo during the pandemic, there has been a “reversal of that trend” and it “is experiencing a fairly significant hangover.”
“Overall, we also view KO as having stronger brand value on the beverage side than PEP, so it has been more successful in pushing through price increases while holding the line on volumes,” he added.
Quincey was in London when the results were released, and was preparing to head to Paris for the Olympics, where the company is a major sponsor.
Among other promotions tied to the games, the company has introduced a new Powerade Gold that it says contributed to a 6% increase in volume this quarter.
(Updates with CEO and analyst comments and share move from the fifth paragraph.)
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