Coca-Cola reported better earnings than expected for the first quarter and said that the effect of tariffs on its business should be “manageable.”
Coca-Cola and other drink companies are facing a 25% tariff on aluminum used in cans and other materials. Last week, PepsiCo cut its full-year profit forecast due to the effect of these tariffs.
“Based on what we know today, the dynamic tariff landscape could impact pockets of our system’s cost structure, as well as consumer sentiment in our markets,” said Coke Chief Financial Officer John Murphy during a call with investors on Tuesday.
However, Murphy added that Coca-Cola has “numerous levers to help manage the impact.” The company has said before that it may switch aluminum suppliers or increase the use of plastic or glass bottles.
Coca-Cola’s global case volumes grew by 2% in the first quarter, with stronger demand in China, India, and Brazil. Coca-Cola Zero Sugar saw a 14% increase in case volumes. Sales of sports drinks and coffee dropped.
In North America, case volumes declined by 3%. Prices increased by 8%, partly because more premium drinks like Topo Chico sparkling water and Fairlife milk were sold.
Coke Chairman and CEO James Quincey said that a video spread on social media in February hurt U.S. sales, especially among Hispanic customers in the South. The video falsely claimed that Coke was reporting its workers to U.S. immigration authorities and encouraged people to boycott the brand.
Quincey said the video’s claims were untrue and the issue has mostly faded. Coke is working to regain trust and sales among Hispanic customers by highlighting its role in local economies and offering special promotions.
Coca Cola Logo on a truckAside from the video, Quincey mentioned that shoppers on both sides of the U.S.-Mexico border were spending less due to uncertainty.
“I think some of the geopolitical tension was just causing people to be a little more cautious with their spending,” he said. “A little less going out, a little more keeping the money in the pocket.”
The company said on Tuesday that revenue dropped 2% to $11.1 billion for the January to March period. When adjusted for things like currency changes, revenue came in at $11.2 billion, which was higher than the $11.15 billion expected by analysts surveyed by FactSet.
Net income increased 5% to $3.3 billion during the quarter. Adjusted earnings were 73 cents per share, beating the forecast of 72 cents.
Coke lowered its full-year profit forecast slightly. It now expects adjusted earnings to grow 7% to 9% in 2025, down from a previous estimate of 8% to 10%. In 2024, Coke earned $2.88 per share.
Coca-Cola shares rose by less than 1% during Tuesday morning trading.