ATLANTA — Earnings and sales volume rose for The Coca-Cola Co. in the first quarter ended March 28, leading Morgan Stanley and BofA to give the company favorable ratings. The good news was tempered by a 2% volume decline in North America amid weakening consumer sentiment, especially among Hispanics.

Atlanta-based Coca-Cola had net income of $3.33 billion, or 77¢ per share on the common stock, which was up 5% from $3.18 billion, or 74¢ per share, in the previous year’s first quarter. Currency headwinds impacted earnings per share by 9 percentage points. Net revenues fell 2% to $11.13 billion from $11.30 billion, driven by currency headwinds and the impact of refranchising bottling operations. Organic revenues rose 6% due to a 5% increase in price/mix and a 1% increase in concentrate sales. Unit case volume increased 2%, led by India, China and Brazil.

“During the quarter, some markets improved sequentially, while other markets face macroeconomic uncertainty and geopolitical tensions that impacted consumer confidence and consumption behaviors,” said James Quincey, chief executive officer, in an April 29 earnings call.

In North America, the Coca-Cola brand and water, sports, coffee and tea beverages primarily drove the volume decrease. Net operating revenues increased 3% to $4.36 billion from $4.23 billion. Price/mix increased 8%, driven by pricing actions and favorable mix.

“In North America, we grew revenue and profit and won value share, but we were not satisfied with our volume performance,” Quincey said. “In addition to challenges with severe weather and calendar shift, volume was impacted by weakening consumer sentiment as the quarter progressed, particularly among Hispanic consumers.”

During the quarter, Coca-Cola disputed social media videos claiming the company had turned in its Latino workers to the US Immigration and Customs Enforcement.

“There was some very unfortunate video circulating around – false, completely false – but (it impacted) the business,” Quincey said.

He said Coca-Cola made progress in North America through volume growth for Coca-Cola Zero Sugar, a strong quarter for both Fairlife and Topo Chico Sabores, and continued traction with food service customer renewals and new accounts. A “hecho en Mexico” (made in Mexico) campaign from Coca-Cola points out the company provides thousands of jobs in Mexico.

“We're focusing in on winning back some of the Hispanic consumers, both from a consumer and a channel point of view and reinforcing some of our affordability options,” Quincey said.

Soft drink volume rises

Companywide, volume increased 2% in sparkling soft drinks with trademark Coca-Cola up 1% and Coca-Cola Zero Sugar up 14%. In sparkling flavors, growth of 2% primarily was led by Asia Pacific. In juice, value-added dairy and plant-based beverages, volume rose 1%, primarily driven by Asia Pacific. In water, sports, coffee and tea, volume increased 2%. Within the category, water rose 1% while sports declined 1% and coffee declined 2%. Tea volume was flat.

Weakening consumer sentiment led to a volume decline in North America, according to The Coca-Cola Co.

| Photo: ©SCOTT HABERMANN – STOCK.ADOBE.COM

Morgan Stanley on April 30 changed its Coca-Cola price target for April 26, 2026, to $81 per share from $78 per share.

“Coke remains our top stock idea, with a Q1 OSG (organic sales growth) pace far above peers offering further confirmation of outsized growth potential within a difficult CPG (consumer packaged goods) environment, along with strong short-term visibility, confirmed by maintained FY25 EPS guidance, with more (foreign-exchange-neutral) conservatism,” said Morgan Stanley, which listed other Coca-Cola benefits as foreign exchange flexibility in a weak US dollar environment and little tariff exposure with local sourcing and costs borne by its bottling network. Morgan Stanley said it thinks that boycotts dragged down results temporarily in North America, but April US scanner data show the situation improving.

BofA kept its “buy” rating for Coca-Cola.

“(Coca-Cola) exited 1Q solidly on track to deliver on its financial targets, a rarity in consumer staples this earnings season,” said Bryan D. Spillane, a research analyst with BofA. “Though volume is broadly strong, declines in Mexico and North America are being addressed by management.”

Guidance for 2025

Coca-Cola continues to expect organic revenue growth of 5% to 6% in the fiscal year. Updates for the fiscal year were made to currency headwind, 2% to 3% from previous guidance of 3% to 4%, and comparable currency neutral EPS growth, 7% to 9% from previous guidance of 8% to 10%.

“While our system primarily executes locally, we're not immune to global trade dynamics,” said John Murphy, president and chief financial officer. “Based on what we know today, the dynamic tariff landscape could impact pockets of our systems' cost structure as well as consumer sentiment in our markets. At this time, we believe we have numerous levers to help manage the impact, which is contributing to our current 2025 guidance.”

Quincy added, “Our exposure to trade, import-export, is not massive in the major countries relative to our cost structure. So, if we were to take the US for example, we are exposed on a couple of inputs like orange juice or some of the dispensing equipment we buy. Our bottling system is a bit exposed to some of the resin and aluminum.”