Coca-Cola has raised its annual profit forecast, now expecting comparable currency-neutral earnings per share to grow at least 9% in 2026, up from its previous forecast of 7% to 8%. According to reports from Reuters, the company's optimistic outlook is driven by robust demand for a range of beverages, particularly zero-sugar options and pricier beverages such as fairlife milk and sparkling soft drinks. This enhanced guidance reflects the company's confidence in sustaining strong performance amid challenging market conditions, with Coca-Cola executives warning that pressure on consumers could extend into 2027. The company is betting on resilient demand to help offset higher input costs, particularly in North America, where it faces challenges from the US war in Iran pushing up commodity prices.
Coca-Cola's third-quarter revenue increased 7.4% to $13.38 billion, significantly beating analysts' estimate of $12.92 billion, as reported by LSEG. Third-quarter net income rose to $4.009 billion, or $0.93 per share, from $3.696 billion, or $0.86 per share, a year earlier. Operating income increased 12% to $4.465 billion from $3.982 billion last year. Comparable earnings per share rose 11% to $0.91, demonstrating the company's ability to deliver consistent profit growth. Adjusted earnings of 91 cents per share also topped estimates of 88 cents, with operating margin rising to 33.4% supporting the strong financial performance. Following these promising results, Coca-Cola shares were down marginally in early trading, after closing at $92.70 on Monday, showing mixed market response to the strong financial performance.
According to Reuters, as high food and fuel prices make consumers more selective, Coca-Cola has sought to sustain demand by offering smaller, cheaper packs while rolling out pricier new flavours such as Coca-Cola Cherry Float. The company also benefited from demand during the soccer World Cup in July, including a brief sales boost for its energy drink brands. Overall volumes rose about 5%, with growth in India, China, Mexico and Brazil helping lift global unit case volumes, as the company focused on local flavors and affordable packs in some markets. North American volumes were flat, with growth in trademark Coca-Cola sodas and pricier beverages such as fairlife milk helping offset higher input costs and a production disruption earlier this year at its Topo Chico brand. The company is grappling with higher packaging costs as the US war in Iran pushes up commodity prices, with aluminum and PET costs having risen more than expected this year.
Latin America emerged as a standout performer, with revenue rising 25% to $2.0 billion and operating income increasing 29% to $1.2 billion, supported by pricing, favourable product mix and currency movements. Global unit case sales increased 5% as Coca-Cola gained customers in India, China, Mexico and Brazil. Water volumes increased 8%, while the combined category of water, sports drinks, coffee and tea grew 5%, despite a 3% decline in sports drinks. North American revenue increased 3% to $5.4 billion, though unit case volumes remained unchanged due to offsetting declines in other categories. Growth in India, China, Mexico and Brazil helped lift global unit case volumes as the company focused on local flavors and affordable packs in some markets.
Coca-Cola raised its free cash flow forecast to at least $13 billion, up from approximately $12.4 billion, while projecting cash generated from operations of at least $15.2 billion. The company also raised its organic revenue growth guidance to at least 5%, compared with previous guidance of approximately 5%. Comparable EPS is now projected to grow at least 9%, including an estimated 3% benefit from currency movements and a 1% headwind from acquisitions and divestitures. Coca-Cola Zero Sugar volumes increased 16%, while sales of the wider sparkling soft drinks category grew 5%, supported by demand across all geographic operating segments. Concentrate sales increased by 7%, with pricing and product mix contributing an additional 1% to revenue growth. Coca-Cola's volume growth across sodas and other beverage brands contrasts with rival PepsiCo's struggles with weak US demand for its snacks and sodas.
