The company reported sales of $10.5 billion against expectations of $9.83 billion. Net profit rose from the $2.25 billion the company reported for Q1 last year to $2.78 billion for the same period this year.
Coca-Cola also reported a 7% increase in prices, which cut across its product portfolio. This increase was due to inflationary pressures, which of course affected the company’s profit margins. The company has also focused on different product pack sizes to achieve the best possible fit between product price and what customers are willing to pay for a given beverage.
The margin problem is not just due to inflation
As part of the global problem with supply chains and rising commodity prices, the company is also facing a gradual increase in its cost items. These are commodities related to the production of packaging, mainly plastic and aluminum, but also various types of flavorings and ingredients such as corn syrup.
Close-up of Coca-Cola drink cans
The pressure on commodity prices and wages is likely to continue. However, the company has a relative advantage over other brands in that their brands are known worldwide and many people find it hard to imagine life without them.
Good numbers are also coming in from around the world
The company continues to thrive internationally. Sales jumped 34% in Latin America and 13% in Europe. Growth was also seen in the Middle East and Africa. As part of its global strategy, the company continues to invest massively in emerging markets.
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Overall, Coca-Cola reiterated its full-year revenue growth guidance of 7-8%. However, it expects a 4% decline in the second quarter due to the impact of foreign currencies. Nevertheless, the company is still viewed as a rather safe company among investors, and its dividend is still quite safe today.
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