ATLANTA — Contributing to the strength of The Coca-Cola Co.’s fiscal 2023 first quarter was the weakness of the year-prior period. COVID-19 restrictions in some markets combined with supply chain disruptions around the world hindered performance during the first quarter of fiscal 2022. Despite the easing of both, management expressed only cautious optimism about the rest of the year.
“Last year … we were talking about Omicron and not everywhere was opened up,” said James Robert B. Quincey, chairman and chief executive officer, during an April 24 conference call with securities analysts. “So, we are seeing in the first quarter of this year additional strength in the away-from-home business.”
Using the United States as an example, Mr. Quincey said quick-service restaurant chains had a strong first quarter, in part, because the market was challenged the year before.
“That will logically moderate as we get into the rest of the year,” he said.
Adding to management’s caution was the first quarter banking crisis and the impact it may have on consumer spending during the rest of the year.
“Clearly, there's uncertainty in how the consumer environment may ultimately play out in 2023,” Mr. Quincey said.
Net income for the quarter ended March 31 rose 12% to $3.1 billion, equal to 72¢ per share on the common stock, up from $2.8 billion, or 64¢, the year before.
Quarterly sales rose 5% to $10.9 billion from $10.4 billion the year before.
Price/mix contributed 11% to the quarterly growth, but The Coca-Cola Co. also experienced volume growth of 3%.
“We saw growth across developed as well as developing and emerging markets,” Mr. Quincey said. “And we continued to gain both volume and value share for the quarter, including at home and away from home channels.”
Developed markets grew mid-single digits, while developing and emerging markets grew low single digits, according to the company. Growth in developed markets was led by Mexico, Western Europe and Australia, while growth in developing and emerging markets was led by China, India and Brazil. Developing and emerging markets growth was impacted by the suspension of business in Russia.
In North America, unit case volume was even, as growth in sparkling soft drinks and juice, value-added dairy and plant-based beverages was offset by a decline in water, sports, coffee and tea. During the conference call, Mr. Quincey said the fairlife brand has grown volume double-digits for eight consecutive years and became a brand with $1 billion in sales last year. The company is planning to expand the product to more channels and packages in the coming months, he said.
In sports beverages, more work needs to be done, he said.
“We need to stabilize and reinvigorate Bodyarmor in tandem with Powerade,” Mr. Quincey said.
Key to reinvigorating the sports beverage business will be innovation and better marketing.
“It's early days, but we see some promising signs to reverting the trend by the end of the year,” he said.
Management reaffirmed its full-year guidance of 7% to 8% organic revenue growth and earnings per share growth of 4% to 5% over $2.48 per share in fiscal 2022.“Despite the global macro picture remaining uncertain in the months ahead, our planned investments and operational strategy will support the momentum we've seen early in the year and give us good visibility to deliver on our 2023 guidance,” said John Murphy, president and chief financial officer.