Coca-Cola Co. posted sales and profit that beat estimates as the company got a boost from its lower sugar beverages, like waters and diet sodas. It also benefited from higher prices, which it announced earlier this year to offset rising input costs due to tariffs.
Key Insights
-The higher prices are in response to a duo of key factors: Freight prices have been rising amid a trucker shortage, while President Donald Trump’s aluminum tariffs have made packaging materials more expensive.
-Chief Executive Officer James Quincey, who took over last year, has been shifting the product portfolio toward healthier drinks as soda consumption declines. This summer, Coke announced a US$5.1 billion deal to buy U.K. coffee chain Costa.
-The company has managed to boost its diet brands, despite an aversion among some consumers to artificial sweeteners. In the quarter, Coca-Cola Zero Sugar was up double digits in every region.
-Quincey has been working to trim costs since taking the helm. Net revenues were hurt by its so-called refranchising effort -- its push to spin off bottling operations -- which shouldn’t surprise investors.
Market Reaction
-The shares rose as much as 1.6 per cent in early trading in New York. The stock was up 1.3 per cent this year through Monday’s close.
Advertisement