The Coca-Cola Company (KO) Q1 2025 earnings summary

Executive summary

• Achieved 2% global unit case volume growth and 6% organic revenue growth in Q1 2025, led by India, China, and Brazil, despite pressure in developed markets and macroeconomic/geopolitical challenges.

• Net operating revenues declined 2% to $11.1B due to currency headwinds and refranchising, but operating income surged 71% to $3.7B, with comparable EPS up 1% to $0.73 and GAAP EPS up 5% to $0.77.

• Margin expansion was driven by organic revenue growth, refranchising benefits, and effective cost management, despite higher commodity costs and non-recurring items.

• Maintained focus on consumer-centricity, agility, and local execution, with continued investment in marketing, innovation, and digital platforms to support brand strength and market share gains.

• Completed the final milestone payment for the fairlife acquisition, significantly impacting cash flow.

Financial highlights

• Organic revenues grew 6% year-over-year; unit case growth was 2%, while net revenues declined 2% to $11.1B due to currency and refranchising.

• Gross profit margin increased to 62.6% (Q1 2025), with comparable gross margin (non-GAAP) at 62.6%; operating margin rose to 32.9% (GAAP), with comparable operating margin at 33.8%.

• Comparable EPS reached $0.73 (non-GAAP), up 1% year-over-year; GAAP diluted EPS was $0.77, up 5%.

• Free cash flow excluding the fairlife payment was $558M; net cash used in operating activities was $5.2B, mainly due to the $6.1B fairlife payment.

• Net debt leverage at 2.1x EBITDA, at the low end of the target range.

Outlook and guidance

• 2025 guidance: organic revenue growth of 5–6%, comparable currency-neutral EPS growth of 7–9%, and comparable EPS (non-GAAP) growth of 2–3%, with a 5–6% currency headwind.

• Expect 2–3 percentage point currency headwind to net revenues and 5–6 point headwind to EPS for 2025.

• Effective tax rate for 2025 projected at 20.8% (non-GAAP), over two points higher than prior year; GAAP effective tax rate was 17.8% in Q1 2025.

• Productivity benefits expected to be weighted toward the latter half of 2025.

• Projected free cash flow excluding the fairlife payment is $9.5B for 2025.