01—Abstract
Summary
Summary of the 10-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.
The Coca-Cola Company (KO) reported solid financial performance for the fiscal year ending December 30, 2023.
The company demonstrated resilience and growth across its diverse portfolio of beverage brands, achieving an increase in net operating revenues driven by favorable pricing initiatives and a 2%a growth in both unit case volume and concentrate sales globally. The company's strategic focus on brand building, innovation, and consumer-centric marketing continues to yield positive results, as evidenced by strong performance in key segments like Latin America and North America. Despite facing headwinds such as inflationary pressures on commodity costs and unfavorable foreign currency exchange rate fluctuations, Coca-Cola maintained a strong gross profit margin of 59.5%.
The company also returned significant capital to shareholders through dividends and share repurchases, underscoring its commitment to shareholder value. A notable item impacting operating income was the remeasurement of contingent consideration for the fairlife acquisition, which led to higher other operating charges. However, the company's overall financial position remains robust, supported by strong operating cash flows and substantial liquidity.
02—Key points
Key Highlights
- Net operating revenues increased by 6% to $45.75 billion, driven by strong pricing and volume growth.
- Worldwide unit case volume grew by 2%, indicating sustained consumer demand for Coca-Cola's products.
- Gross profit margin improved to 59.5% from 58.1% in the prior year, reflecting effective pricing strategies and cost management.
- Operating income increased by 4% to $11.31 billion, despite challenges from commodity costs and currency fluctuations.
- The company returned $10.2 billion to shareholders through dividends ($8.0 billion) and share repurchases ($2.3 billion).
- Significant increase in interest expense due to higher interest rates, impacting net income.
- The company continues to manage its business through a global network of bottling partners, with structural changes in certain regions impacting segment performance.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Coca Cola Co kept $0.23.
- Revenue$45.75B100.0%
- Cost of revenue−$18.52B40.5%
- Gross profit$27.23B59.5%
- Operating costs−$15.92B34.8%
- Operating income$11.31B24.7%
- Interest, other & tax−$597.0M1.3%
- Net income$10.71B23.4%
Where FY2023 revenue went
$45.75B- Cost of revenue: $18.52B, 40% of revenue
- SG&A: $13.97B, 31% of revenue
- Net income: $10.71B, 23% of revenue
- Other operating costs: $1.95B, 4.3% of revenue
- Interest, other & tax: $597.0M, 1.3% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 20, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $45.75B$43.00B | +6.4% |
| Cost of Revenue | $18.52B$18.00B | +2.9% |
| Gross Profit | $27.23B$25.00B | +8.9% |
| SG&A Expenses | $13.97B$12.88B | +8.5% |
| Operating Income | $11.31B$10.91B | +3.7% |
| Interest Expense | $1.53B$882.00M | +73.1% |
| Net Income | $10.71B$9.54B | +12.3% |
| EPS (Basic) | $2.48$2.20 | +12.7% |
| EPS (Diluted) | $2.47$2.19 | +12.8% |
| Shares Outstanding (Basic) | 4.32B4.33B | −0.1% |
| Shares Outstanding (Diluted) | 4.34B4.35B | −0.3% |
05—Questions
Frequently Asked Questions
What was Coca-Cola's revenue growth in 2023?
Coca-Cola reported a 6% increase in net operating revenues for the year ended December 31, 2023, reaching $45.75 billion, up from $43.00 billion in 2022. This growth was primarily driven by favorable pricing initiatives (10% impact) and a 2% increase in volume, partially offset by unfavorable foreign currency exchange rate fluctuations (-4% impact).
How did Coca-Cola's profitability fare in 2023?
Coca-Cola demonstrated strong profitability in 2023, with its gross profit margin increasing to 59.5% from 58.1% in 2022. Operating income rose by 4% to $11.31 billion. However, the consolidated operating margin saw a slight decrease to 24.7% from 25.4% in 2022, attributed to higher commodity costs, increased marketing spending, higher other operating charges (including a significant remeasurement of contingent consideration), and unfavorable foreign currency exchange rates.
What is the company's outlook for 2024 regarding capital expenditures and shareholder returns?
The company expects capital expenditures to be approximately $2.2 billion in 2024. They also anticipate repurchasing shares to offset dilution from employee stock-based compensation plans. Additionally, the Board of Directors increased the regular quarterly dividend to $0.485 per share, marking the 62nd consecutive annual increase.
What are the key risks highlighted in the report?
The report details several risks, including unfavorable economic and geopolitical conditions, increased competition, potential failure in innovation activities, changes in the retail landscape, challenges in expanding in emerging markets, productivity initiative management, attracting and retaining skilled talent, supply chain disruptions, evolving consumer preferences (health and sustainability), product safety and quality concerns, cybersecurity threats, data privacy regulations, and the significant ongoing U.S. federal income tax dispute with the IRS.
06—Continue