© Reuters. FILE PHOTO: Traffic passes a digital billboard for Coca-Cola in the Times Square area of Manhattan in New York City, USA on March 2, 2023. REUTERS/Chris Helgren
Written by Ananya Maryam Rajesh
(Reuters) – Coca-Cola Inc on Monday beat first-quarter revenue estimates, earnings stemming from resilient demand for soft drinks and multiple price increases by the beverage company to combat rising commodity and freight costs.
The manufacturer of Fanta and Sprite said average selling prices increased 11%, while global case unit volumes rose 3%.
Shares of the company rose about 2% in pre-market trading.
Coca-Cola (NYSE:) said in February that it would raise soda prices further in 2023 “worldwide” to combat stubbornly high costs but at a moderate pace, while rival PepsiCo (NASDAQ:) has paused price hikes.
Consumer goods makers raised prices to pass sharp increases in costs for raw materials from supply chain hurdles fueled by the pandemic and exacerbated by the Russia-Ukraine conflict.
However, Pepsi and Coca-Cola faced little or no consumer handicaps, thanks to their dominance of the global soft drink market.
The average price of a 192-ounce Coca-Cola soda in the United States rose to $9.30 in 2022 from $8.03 in 2021, according to NielsenIQ data. And it’s $10.55 this year, so far.
Coca-Cola’s operating margin for the first quarter was 30.7%, compared to 32.5% in the prior year, as price increases didn’t fully help offset the impact from higher operating costs, higher marketing spending and investments and a stronger dollar.
“With prices expected to moderate throughout the year, this should come along with moderate levels of commodity inflation, which should help protect profitability,” said Gerald Pascarelli, an analyst at Wedbush.
Revenue increased 4.3 percent to $10.96 billion, beating estimates of $10.80 billion, according to Refinitiv data.
Adjusted earnings were 68 cents per share, compared to estimates of 64 cents.
However, the company maintained its annual forecast.