--- title: "Coca-Cola (Minutes): 25Q2 may face high base pressure" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/29241316.md" description: "Below is the Minutes of Coca-Cola's Q1 FY25 earnings call. For Quick Interpretation of the earnings report, please refer to《Coca-Cola: The Higher the Tariffs, the More Precious the "Happy Fat 宅 Water"?》" datetime: "2025-04-30T00:22:53.000Z" locales: - [en](https://longbridge.com/en/topics/29241316.md) - [zh-CN](https://longbridge.com/zh-CN/topics/29241316.md) - [zh-HK](https://longbridge.com/zh-HK/topics/29241316.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # Coca-Cola (Minutes): 25Q2 may face high base pressure $Coca Cola(KO.US) **Coca-Cola (Minutes): Q2 May Face High Base Pressure** **Below are the minutes of Coca-Cola's FY25 Q1 earnings call. For earnings analysis, please refer to《**[**Coca-Cola: The Higher the Tariffs, the More Precious the "Happy Fat 宅 Water"?**](https://longportapp.cn/zh-CN/topics/29233883)**》** **1\. Key Earnings Highlights** **1\. Overall Performance:** **a. Revenue**: Organic revenue growth of 6%, reaching the upper limit of long-term growth expectations. Concentrate sales lagged unit case volume by 1 percentage point; price/product mix growth of 5%, mainly driven by pricing. **b. Profit**: Comparable gross margin improved by ~30 bps, comparable operating margin improved by ~130 bps. Q1 comparable EPS was $0.73, up 1% YoY. **c. Cash Flow**: Free cash flow was ~$560M after excluding Fairlife contingent payment. **d. Financial Position**: Solid balance sheet with net debt/EBITDA ratio of 2.1, at the lower end of the 2-2.5x target range. Confident in long-term free cash flow and capital allocation capabilities. **2\. 2025 Guidance**: Expect organic revenue growth of 5%-6%; FX headwinds expected to reduce comparable net revenue by ~2-3 percentage points. Effective tax rate expected at 20.8%; full-year comparable EPS growth projected at 2%-3%. **II. Detailed Earnings Call Content** **2.1 Key Management Remarks** **1\. Q1 Business Performance:** a. Overall: Achieved 2% volume growth and organic revenue at the upper limit of long-term expectations. Comparable gross and operating margins improved, demonstrating resilience. **This quarter saw volume growth across all beverage categories globally. Gained value share through three key metrics: total share, at-home consumption share, and away-from-home consumption share.** **b. Regional Performance** \- North America: Revenue and profit growth with value share gains, but volumes missed expectations due to bad weather and weaker consumer sentiment (especially among Hispanic consumers). Highlights include continued growth for Coca-Cola Zero Sugar, strong performance from Fairlife and Topo Chico Sabores, and progress in foodservice customer renewals/expansion. \- Latin America: Flat volumes but organic revenue and comparable currency-neutral operating profit growth. Brazil and Argentina stood out, while Mexico struggled due to high prior-year base, calendar shifts, and geopolitical-driven consumer sentiment declines. In Mexico, we acted quickly by launching affordable multi-packs in key channels and running trust-building campaigns. Also driving long-term growth via connected packaging and digital platforms. \- EMEA: Volume, organic revenue, and comparable currency-neutral operating profit growth. **Europe saw divergent East/West performance with volume declines. Addressed through affordability-focused initiatives** like integrated "Everyday Celebrations" marketing. Santa Fe's Xbox collab attracted Gen Z. \- Eurasia & Middle East: Strong volume growth and value share gains. Turkey improved operations via local insights despite external pressures. \- Africa: Volume growth despite high prior-year base and double-digit inflation, driven by refillables and affordability bundles plus localized campaigns like "Wantafanta" and "Spicy Flavors." \- APAC: Volume, organic revenue, and comparable currency-neutral operating profit growth. ASEAN/South Pacific volumes declined due to weak Thailand/Indonesia offsetting strong Philippines, but still gained value share via affordability and distribution expansion. China executed well with Lunar New Year campaigns and out-of-home channel investments—classic Coke excelled while Sprite recovered gradually. India added 350K outlets and 100K digital platform clients. Japan/Korea grew volumes and value share. **2\. Operating Environment**: Mixed macroeconomic uncertainty and geopolitical tensions affecting consumer confidence. Benefiting from industry resilience, high scalability barriers, and significant growth/share opportunities. Core strengths: 30 billion-dollar brands + localized distribution. Future focus: consumer-centric agility and ecosystem partnerships. **3\. Execution Improvements:** **a. Strategy**: Localized decision-making leveraging global scale. **b. Portfolio**: 30% of volumes from low/no-calorie drinks; 68% of products under 100 calories/12oz. Balanced affordability/premiumization. **c. Marketing**: "Share a Coke" 2025 returns with digital enhancements for Gen Z. **d. Innovation**: Fuze Tea expanded to Spain; Simply Pop probiotic soda launched in the US. **2.2 Q&A** **Q: Strong Q1 but unchanged FY guidance—due to tough start or FX?** A: Prudent on emerging market FX volatility despite G10 hedging. **Q: Volume growth sustainability amid geopolitics?** A: Confident in full-year guidance despite Q2 tough comps. **Q: Mexico turnaround plans?** A: Focusing on refillables and local trade partnerships. **Q: US anti-brand sentiment countermeasures?** A: Doubling down on Hispanic outreach and affordability. **Q: Local vs. global brand balancing?** A: Emphasizing "locally made" narratives without portfolio shifts. **Q: Tariff exposures?** A: Limited risk due to franchised local production. **Q: Operating margin sustainability?** A: Targeting 30%-31% through cost/revenue management. **Q: Fairlife growth trajectory?** A: Capacity expansions will support multi-year growth. **Q: EMEA regional breakdown?** A: Eurasia drove growth; Europe flat with West softness. **Q: Away-from-home channel trends?** A: Outperforming at-home globally, especially in APAC. **Q: Functional beverage innovation?** A: Prioritizing taste but open to macro-nutrient trends. **Q: Q2 uncertainty drivers?** A: Supply chain ripple effects beyond our control. **Q: China deflation impact?** A: Lunar New Year boosted Coke; Sprite recovering. **Q: Marketing efficiency?** A: Using AI for creative optimization and media planning. **Q: Russia/Ukraine business?** A: Previously 1%-2% of profits; Ukraine was small pre-war. **Q: Hispanic consumer recovery?** A: Temporary pullback; reinforcing "locally made" messaging. **Disclosures:** [**Dolphin Research Disclaimer**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [KO.US](https://longbridge.com/en/quote/KO.US.md)