Coca-Cola’s profit fell 8% in the third quarter after sales fell 1% | Companies
Coca-Cola’s third-quarter sales fell 1% despite sharp price increases for its products. The company’s turnover amounted to 11,854 million dollars (about 11,000 million euros), which decreased due to a drop in sales taking into account the exchange rate and other extraordinary impacts. Excluding these effects, the company’s organic revenue grew by 9%. A fall in real accounts and rising costs, including restructuring costs, led to a drop in profit for the period by 8%, to $2.848 million.
The company said it expects to end the year with organic sales growth of 10% (previously it expected 9% to 10%), but at the same time warned of a significant impact of four points due to exchange rates and another factor. 4-5 points for changes resulting from acquisitions, divestitures and structural changes, so actual revenue growth will be low. Through September, group sales rose 2% to $35.517 million, while profits fell 3% to $8.346 million.
However, organic sales growth of 9% in the third quarter exceeded analysts’ forecasts, which indicated just over 6%. It was increased by 10% due to prices for its products (this includes an increase in prices and changes in the composition of products sold), which made it possible to compensate for a slight decrease in the volume of sales of concentrates and units of production, which in this case disappoints the market.
The quarterly result was particularly impacted by $919 million of fair value adjustment charges related to the acquisition of Fairlife in 2020.
Cash flow from operations and free cash flow were $2.9 billion and $1.6 billion, respectively. Both figures were down from the previous year, largely due to a $6 billion payment to the Internal Revenue Service related to an ongoing tax dispute. This is a lawsuit in which the company risks more than $16 billion.
Excluding this impact, free cash flow was $7.6 billion, down $294 million from the prior year, primarily due to higher other tax payments, higher investments and changes in working capital, partially offset by strong business performance.
The company is reducing dependence on its core brand and soft drinks by investing in other products. The company’s water, sports drink and tea offerings consist of 12 brands that generate more than $1 billion in annual revenue and have increased nearly $9 billion in incremental brand value since 2020.
“Our business continues to demonstrate resilience in the face of a dynamic external environment,” James Quincey, president and CEO of The Coca-Cola Company, said in a statement. “We are encouraged by our results this year and our system’s ability to address short-term challenges while remaining focused on long-term growth opportunities,” he added.