The paragraph is an introduction to The Coca-Cola Company's First Quarter 2025 Earnings Results Conference Call. The operator introduces the call, noting that it is recorded and primarily for investors, while media should contact Coca-Cola's Media Relations for inquiries. Robin Halpern, Vice President and Head of Investor Relations, begins by thanking participants and identifies key executives present, including James Quincey, CEO, and John Murphy, CFO. Financial schedules and non-GAAP measure reconciliations are available on Coca-Cola's website. The call may include forward-looking statements. Following prepared remarks, there will be a Q&A session. James Quincey then expresses confidence in the company's strategy and resilience in a challenging environment.

The company achieved 2% volume growth and high-end organic revenue growth, attributing their success to their employees' actions worldwide. They emphasize the importance of being consumer and customer-centric and are optimistic about meeting their 2025 guidance. Despite varying market conditions, including macroeconomic uncertainties and geopolitical tensions, the company reported strong organic revenue growth and improved system alignment, with volume growth across all global beverage categories. They successfully gained value share in key metrics but see further improvement opportunities. While they grew revenue and profit in North America, they were disappointed with their volume performance.

In this paragraph, the company discusses challenges and opportunities across different regions. Despite severe weather, a calendar shift, and weakening consumer sentiment, particularly among Hispanic consumers, Coca-Cola Zero Sugar and other brands like fairlife and Topo Chico Sabores experienced growth. The company is focusing on quick decision-making and prioritizing investments to drive volume growth. In Latin America, despite flat overall volume, organic revenue and income grew, with strong performances in Brazil and Argentina but weaker momentum in Mexico due to past strong growth and geopolitical issues. The company is addressing these challenges by emphasizing value packages and launching a local trust-building campaign. In EMEA, despite a volume decline in Europe, the company grew revenue and income, focusing on affordability and marketing campaigns like the Everyday Tasty Celebrations and a Fanta partnership with Xbox to attract Gen-Z. In Eurasia and the Middle East, they achieved strong volume growth and value share gains.

The paragraph discusses the business performance of a company across different regions. In Turkey, the company improved its performance by understanding consumer motivations and pivoting during demand shifts. In Africa, they achieved volume growth despite challenges like inflation by focusing on affordability and local marketing campaigns. In the Asia-Pacific region, volume and revenue grew despite a decline in volume in ASEAN and South Pacific due to weaker performance in Thailand and Indonesia. The company emphasized affordability, increased outlet coverage, and cold drink equipment placement. In China, efforts led to volume growth through effective marketing around the Lunar New Year and investments in away-from-home channels, with strong performance from Coca-Cola and Sprite. In India, the company expanded its outlets and digital platforms, resulting in significant volume growth. Japan and South Korea also saw volume growth, particularly from Ayataka Tea, contributing to the company's value share gains.

The paragraph highlights that the company is thriving through improved execution in key channels and is ready to adapt to shifting consumer trends. They focus on expanding their strategic advantage by leveraging a diverse beverage portfolio, which includes low and no-calorie options and a mix of affordable and premium products. This consumer-centric approach is driving growth. Additionally, the company continues to boost revenue through innovative marketing, including digital initiatives like Studio X, which enhances marketing campaigns in real time. This strategy was successfully applied during the Lunar New Year campaign across Asia-Pacific, resulting in increased Coca-Cola consumption. Furthermore, the company plans to revitalize the Share a Coke campaign with new digital and customizable experiences.

The paragraph discusses Coca-Cola's strategic initiatives, highlighting the return of the "Share a Coke" campaign and the expansion of Fuze Tea in Spain and Canada. It notes the successful launch of Coca-Cola Orange Cream in the U.S. and the introduction of Simply Pop, a prebiotic soda. The company emphasizes its commitment to local production and procurement, contributing significantly to local economies, with notable impacts in the U.S. and Brazil. Despite potential global trade tensions and macroeconomic uncertainties, Coca-Cola remains focused on its long-term growth strategies, leveraging its global scale and local market presence.

The company is benefiting from three main factors: operating in a resilient industry with predictable growth, high barriers to scale despite low barriers to entry, and substantial potential for industry development and market share growth. Key strengths include a powerful brand portfolio and effective distribution. The focus remains on agility, consumer centricity, and ecosystem partnerships to drive long-term growth. The company's strategy is adaptable to dynamic external conditions, supported by a dedicated workforce. In the recent quarter, organic revenues grew by 6%, aligning with the company's long-term growth plans. Unit case growth was 2%, with concentrate sales slightly behind due to fewer days in the quarter. Price mix growth of 5% was mainly due to pricing actions, with margins improving significantly.

In the first quarter, the company achieved a 1% increase in comparable EPS to $0.73, despite facing currency headwinds, bottler refranchising dilution, higher net interest expenses, and a tax rate increase. The free cash flow, excluding a payment for fairlife, rose to approximately $560 million. A $6.2 billion payment for fairlife was completed, with expected moderate growth until additional capacity is available in 2025. The company's balance sheet is strong, with a net debt leverage of 2.1 times EBITDA, supporting its capital allocation priorities and dividend. The company is monitoring global trade issues and their potential impact but is confident it can manage these challenges through its flexible business model and strategies.

The company anticipates organic revenue growth of 5% to 6% and comparable currency-neutral EPS growth of 7% to 9% for 2025, in line with its long-term growth goals. The bottle refranchising, including the Philippines completed in early 2024, poses a slight revenue and EPS challenge, with significant impact in the first quarter. Current rates and hedging suggest 2-3 point and 5-6 point currency headwinds for revenues and EPS, respectively. The 2025 tax rate is expected to be 20.8%, a 2-point increase from the previous year. Overall, 2025 EPS growth is projected at 2% to 3% from $2.88 in 2024. The company will face a challenging volume comparison in the second quarter but expects productivity gains later in the year. The fourth quarter will benefit from an extra day in the reporting calendar. Despite macroeconomic uncertainties, the company remains committed to executing its strategy effectively.

The paragraph discusses a financial Q&A session following a quarterly earnings report. Dara Mohsenian from Morgan Stanley asks about the company's decision to maintain its full-year 2025 earnings guidance despite a strong Q1 performance and improved foreign exchange rates. John Murphy responds by explaining that the currency guidance is based on current rates and hedge positions, and that it is too early to adjust earnings due to ongoing volatility, particularly in emerging markets. He also addresses unit case volume growth, noting it has been strong globally thanks to a solid portfolio, but acknowledges the challenges posed by tougher comparisons in future quarters and geopolitical risks.

In the paragraph, the discussion focuses on the company's efforts to address challenges observed in the first quarter and emphasizes confidence in the full-year guidance. The speaker highlights that each financial quarter is unique, comparing them to having different "personalities." The conversation then shifts to operations in Latin America, noting that while there was strong growth in Brazil and Argentina, Mexico experienced a softer quarter. Contributing factors to Mexico's performance include the comparison to a strong first half of the previous year and the shift of the Easter holiday from the first quarter to the second quarter.

The paragraph discusses the various factors affecting Coca-Cola's performance in the U.S. and Mexico, including macroeconomic uncertainty following elections and geopolitical tensions. This has led to a decrease in consumption among Hispanic consumers in the U.S. and affected regions like the Mexican border, which is closely connected to the U.S. Despite these challenges, the company has seen positive results with products like Coke Zero, Del Valle, Santa Clara, and Fuze. To address these issues, Coca-Cola is focusing on affordability, promoting the "Hecho en Mexico" campaign to highlight local job creation, and working with local trade partners. The company remains confident in its strategy and expects to overcome current challenges, although it anticipates variability in quarterly performance. The paragraph also introduces a question from Lauren Lieberman of Barclays, asking about Coca-Cola's efforts to manage anti-brand sentiments in the U.S. James Quincey is expected to respond.

The paragraph discusses the company's strategy to maintain agility and reprioritize actions to address various challenges in the U.S. market. Despite a successful multi-year strategy with bottling partners, the first quarter presented setbacks, including shifts in consumer behavior due to external factors like Easter timing, reduced Hispanic consumer traffic, false video circulation, cold weather, and calendar changes. The focus is on recovering in the Southern states, particularly with Coke Original, and regaining Hispanic consumers' trust. The company remains optimistic due to growth from brands like Coke Zero, Fairlife, and Topo Chico and aims to reinforce affordability options. They anticipate a potentially challenging Q2 but believe they can manage the controllable factors to return to their successful strategy.

In the paragraph, James Quincey discusses the balance between Coca-Cola's global and local brand strategies. He emphasizes that while Coca-Cola is known globally, it operates as a profoundly local business with beverages produced within each country by local employees. This local production contributes significantly to the economies, such as in the U.S. and Brazil. Instead of shifting focus solely to local brands amid changing demands, the company aims to enhance the local relevance of its global brands. This involves highlighting the local nature of production, especially during geopolitical tensions, by emphasizing that products are made by local factories and workers.

The paragraph discusses how Coca-Cola emphasizes local production, distribution, and workforce to maintain affordability and strengthen its brand during challenging times. This approach helps reinforce the brand's global nature while ensuring local presence, considered a reliable strategy based on past experiences. The company's business model is deemed resilient to disturbances. Then, Filippo Falorni from Citi asks about the impact of global trade dynamics and tariffs on Coca-Cola's operations, specifically regarding aluminum. He also inquires about any negative sentiment towards American brands in countries besides Mexico due to global trade disputes. James Quincey is about to respond.

The paragraph discusses the importance of focusing on affordability and local strategies rather than reacting to sentiment. The author mentions recent economic challenges in countries like the U.S., Mexico, and some European nations, emphasizing the need to separate sentiment from actual behavior. It is stated that while global trade dynamics, such as tariffs, are manageable and are not extensively affecting the cost structure due to the local franchise model, the business is mindful of changing environments. The paragraph highlights that exposure to trade is relatively small, with minor impacts from inputs like orange juice, dispensing equipment, resin, and aluminum. Additionally, market pricing considerations must include commodity prices, exchange rates, and long-term hedging positions.

The paragraph discusses the company's approach to pricing and operating margins. They plan to maintain current pricing plans in the U.S., taking into account various cost elements and local bottling operations. Chris Carey from Wells Fargo asks about the sustainability of their strong operating margins, to which John Murphy responds positively, mentioning that the first quarter results are promising and partly due to timing. However, he emphasizes the company's long-term strategy to expand margins, noting the progress made over recent years to surpass a 30-31% margin as they move forward.

The paragraph discusses the company's strategy to manage costs and maintain a quality top-line over time, aligned with their investment thesis to expand both top and margin lines. It highlights their adaptation to current requirements and confidence in continuing growth and brand investment. Robert Ottenstein from Evercore asks about the future trajectory of fairlife and Core Power, given their success. He inquires about service levels, capacity expansion, the brand's potential growth, and intellectual property protection. James Quincey responds, noting the focus on percentage growth at fairlife and acknowledging the impact of large numbers on growth rates.

The paragraph discusses the rapid growth and success of the Fairlife brand within the beverage industry, highlighting its strong performance and contribution to retail dollars. The business has experienced high double-digit percentage growth over recent years due to the quality of its product, such as its taste, shelf-life, and nutritional benefits. Expansion of production capacity is underway to meet future demand, allowing opportunities for increased marketing and innovation. Despite tremendous growth, the company has focused on core products to manage capacity constraints effectively.

In the paragraph, Andrea Teixeira from J.P. Morgan asks about the company's performance in the Europe, Middle East, and Africa (EMEA) region, specifically the 3% growth in unit volume and the dynamics in Western Europe, where some consumer packaged goods (CPG) companies have noted a deceleration. She also seeks clarification on the company's financial outlook, noting differences in FX impact and underlying profit expectations. John Murphy responds by explaining that their currency guidance is based on current knowledge and hedge positions, and they will update it as the year progresses. James Quincey adds that the volume growth in the EMEA segment was mainly driven by the Eurasian and some North African markets.

The paragraph discusses the performance of a European business segment, noting that its volume performance was consistent with previous quarters, despite mixed results between Eastern and Western Europe. It mentions various influences such as macro uncertainties and political tensions, similar to those affecting the U.S. and Mexico. However, positive outcomes were seen, particularly with products like Coke Zero and Sprite Zero, and successful marketing partnerships with brands like Xbox and Fanta. The focus moving forward is on improving revenue growth management (RGM), affordability, and availability of cold drink equipment in anticipation of the key summer season. The paragraph ends with a transition to a question from Bonnie Herzog of Goldman Sachs about the away-from-home channel, asking about its performance and potential impact on the business financially if it slows down, with James Quincey offering to provide insights, starting with the U.S. market.

The paragraph discusses varying trends in consumption across regions, emphasizing that immediate consumption has remained more stable compared to future consumption. In North America, iced tea performed well, whereas future consumption faced challenges, similar to the trend observed in Europe. The growing importance of affordability in retail channels is highlighted despite geopolitical factors. Globally, both home and away-from-home consumption are increasing, with away-from-home growing slightly faster, especially in the Asia-Pacific region. In contrast, developed markets like the U.S. and Europe experienced weakness in future consumption, indicating a need to collaborate with retailers on affordability solutions. After this analysis, the conversation shifts to a question from Kaumil Gajrawala from Jefferies regarding currency concerns and the potential end of a strong dollar supercycle.

In the paragraph, James Quincey and John Murphy discuss the potential impact of U.S. dollar fluctuations on their company's financial strategies. They indicate that while the U.S. dollar index, which primarily measures the dollar against six currencies, shows some weakness, this is not their primary concern because most of their top market currencies are not represented in this index. They remain focused on growing U.S. dollar EPS and are prepared to adjust their strategies if significant changes occur in the currency landscape. Following this, Nik Modi from RBC Capital Markets shifts the conversation to ask about the company's interest in incorporating popular wellness ingredients like ashwagandha and turmeric into their products. He inquires about the necessity of clinical studies to support health claims related to these ingredients.

In the paragraph, James Quincey discusses consumer preferences in the beverage industry, particularly in the context of the aging U.S. population. He emphasizes the importance of taste, noting that although some consumers may trade taste for functional ingredients, taste will remain a priority. He illustrates this with an example from France, where a past attempt to combine a drink with a tanning pill failed because consumers preferred to consume them separately. He concludes that, while there is interest in specific ingredients, not all combinations are successful, and consumer behavior must be closely followed.

The paragraph features a dialogue during a conference call, where Peter Grom from UBS asks a follow-up question about the company's expectations for the second quarter (2Q), given the changes since the initial outlook in February. James Quincey responds, acknowledging that the 2Q will have complexities due to strong performance in the same quarter last year, making comparisons challenging. Despite this, they aim to perform well, as 2Q is vital for the annual performance. Quincey notes short-term supply chain disruptions in the U.S., hinted at by container shipping bookings for late May to early June, impacting expectations.

The paragraph discusses the outlook for the business in Q2, noting no expected supply chain disruptions for their specific business in the U.S., although other industries might experience issues affecting consumer sentiment. Despite potential uncertainties, consumer spending appears robust. The company is prepared to manage potential challenges due to their strategy and adaptability. In a separate context, Charlie Higgs asks about Asia-Pacific volumes, particularly in China. James Quincey responds, stating there's positive momentum with 6% volume growth, driven by strong performance in India and growth in China. The company has focused on refining their portfolio and improving brand performance, particularly around events like the Lunar New Year, though some brands like Sprite are still in development.

The paragraph discusses a discussion in a business call where Kevin Grundy from BNP Paribas asks about balancing margin delivery with volume growth in North America, focusing on a strong 30% margin despite flat or declining volumes. Kevin seeks insight into how the company plans to manage this balance in the near and intermediate term, given uneven macroeconomic conditions. John Murphy responds, highlighting the company's ongoing efforts to improve the overall margin profile in North America over the past three to four years.

The paragraph discusses the company's efforts to improve margins, particularly in North America. A stronger core business, better revenue growth management, and the addition of fairlife to the portfolio are key factors driving improvement. The focus is on aligning North America's margin profile with other developed regions and investing in growth opportunities. In response to a question from Michael Lavery of Piper Sandler, John Murphy explains that the company prioritizes supporting its portfolio through efficient execution of necessary activities, instead of merely cutting costs. The aim is to enhance productivity and efficiency, for instance, by using generative AI in marketing, while ensuring effectiveness is maintained.

The paragraph discusses the company's strategic shift towards being more activity-driven in recent years, aiming to enhance efficiency through better use of creative spending and technology. They are focusing on optimizing activities by delivering them faster and cheaper, while also using sophisticated data for planning media to increase impact. The conversation then shifts to addressing a question about the company's past and current business in Ukraine and Russia, noting that a few years ago, they withdrew their brands from these markets, which previously accounted for 1-2% of revenue and a similar percentage of profits. The impact of war on the smaller Ukrainian market is acknowledged, though it was considered a good market.

In response to Robert Moskow's questions, James Quincey addressed two main points. First, he mentioned that the impact of a false video about Trademark Coke is largely behind them, though they continue to focus on recovery through local engagement and affordability strategies. Second, regarding the Hispanic consumer, Quincey noted a slight decline in purchasing and traffic partly due to geopolitical tensions and economic caution, affecting consumer behavior both in the U.S. and Northern Mexico, influenced by the integrated supply chain between these regions.

The paragraph discusses the company's strategy to navigate a challenging environment by focusing on an "all-weather strategy." This includes emphasizing brand strength, execution, local connectivity, and promoting products made in the U.S. and Mexico. The goal is to maintain agility, remain consumer-centric, and collaborate closely within their ecosystem throughout the year to drive growth and add value. The company acknowledges potential short-term volatility but is confident in its approach. The discussion is followed by closing remarks from James Quincey and the conference operator.

This summary was generated with AI and may contain some inaccuracies.