Coca-Cola Posts 3.6% EPS Growth in Q2

Core Insights - Coca-Cola reported Q2 2025 results with adjusted earnings per share (Non-GAAP) of $0.87, exceeding analyst estimates by $0.04, while GAAP revenue was $12.54 billion, slightly below the $12.57 billion consensus [1][2] - The company demonstrated solid profitability and brand strength despite challenges in sales volumes and increased cash flow volatility due to a major acquisition payment [1] Financial Performance - Adjusted EPS (Non-GAAP) increased by 3.6% year-over-year from $0.84 in Q2 2024 [2] - GAAP revenue grew by 1.5% year-over-year from $12.36 billion in Q2 2024 [2] - Operating margin (GAAP) improved significantly to 34.1%, up from 21.3% in Q2 2024, attributed to higher pricing and cost control [2][5] - Free cash flow (Non-GAAP) was negative at ($2.14 billion), a decline of $5.46 billion year-over-year, primarily due to a $6.1 billion contingent payment related to the acquisition of fairlife [2][10] Business Overview - Coca-Cola operates in over 200 countries, offering a diverse portfolio of nonalcoholic beverages, including sparkling soft drinks, juices, water, and coffee [3] - The company focuses on product innovation, particularly in low and no-sugar options, to adapt to changing consumer preferences and health trends [4] Operational Developments - Organic revenue (Non-GAAP) rose by 5%, driven by a 6% global increase in price/mix, despite a 1% decline in worldwide unit case volume [6] - In North America, net revenue increased by 3%, but unit case volume declined by 1%, with specific product lines like Coca-Cola Zero Sugar showing double-digit growth [7] - EMEA region experienced a 3% increase in unit case volume, while Latin America saw a 2% decline [8] Future Outlook - For fiscal 2025, Coca-Cola projects organic revenue growth between 5% and 6% and adjusted EPS growth of around 3%, with currency impacts expected to reduce EPS growth by about 5% [11] - Free cash flow (excluding the fairlife payment) is forecasted to reach $9.5 billion, with an increase in the effective tax rate from 18.6% in 2024 to an estimated 20.8% in 2025 [11]