Coca-Cola NYSE: KO reported third-quarter results that showed continued volume growth, higher organic revenue and expanded margins, while management said affordability initiatives, zero-sugar offerings and local-market execution supported performance across an uneven global consumer environment.
Chief Executive Officer Henrique Braun said unit case volume rose 5% in the third quarter and organic revenue increased 7%. The company also gained global value share for a 22nd consecutive quarter, according to Braun. Comparable earnings per share were $0.91, up 11% from the prior year, including a two-point benefit from currency tailwinds.
“Our third quarter results reinforce the continued strength of The Coca-Cola system,” Braun said, citing the company’s portfolio, bottling-partner network and investments in consumer recruitment, digital capabilities, revenue growth management and execution.
Margins Expand Alongside Investment
President and Chief Financial Officer John Murphy said price mix grew 1% in the quarter, reflecting four points of pricing actions that were partly offset by three points of unfavorable mix. The mix pressure came primarily from geographic mix, investment timing and category mix.
Comparable gross margin increased about 170 basis points, while comparable operating margin rose about 110 basis points. Murphy attributed the gains to underlying expansion, currency tailwinds and the favorable structural impact of last year’s sale of finished-product operations in Nigeria.
Murphy said the company continued to invest behind its brands even as margins expanded. Above-the-line marketing spending increased by double digits as Coca-Cola prepared for what management described as a strong start to 2027. The company expects marketing investments to grow broadly in line with gross margins over time.
Year-to-date free cash flow totaled $11.4 billion, higher than the prior year. Murphy said the increase reflected strong underlying business performance, progress in working-capital initiatives and timing factors, including capital expenditures that were behind the company’s typical pace during the first nine months.
Net debt leverage stood at 1.3 times EBITDA, below the company’s target range of two to 2.5 times. Murphy said Coca-Cola is managing its balance sheet while awaiting a court decision in its ongoing dispute with the Internal Revenue Service. The company expects its balance-sheet position to provide flexibility across potential outcomes from that case.
Regional Results Highlight Affordability Focus
In North America, Coca-Cola reported revenue growth and value-share gains, while volume was even. Braun said volume was affected by the timing of the July 4 holiday and temporary challenges in certain finished-goods businesses, though performance improved sequentially each month during the quarter.
Trademark Coca-Cola, fairlife, Powerade, Fresca and smartwater posted strong volume growth in the region, while Mr. Pibb recorded another quarter of double-digit volume growth. Management said it needs to improve performance for Sprite, BODYARMOR and its supply chain heading into next year.
In Latin America, the company grew volume, delivered what it called balanced top-line growth and gained value share, supported by broad improvement across the region. Brazil maintained momentum in trademark Coca-Cola, Sprite and sports beverages, while management said conditions in Mexico and Argentina remained challenging.
Europe posted volume growth, though Coca-Cola lost value share in several key Western European markets. Management said it is taking actions to improve performance, including soccer-related activations, meal occasions and affordable packaging such as its 500ml Super Can.
Africa delivered high-single-digit volume growth and value-share gains despite a difficult comparison. In Asia Pacific, Coca-Cola gained value share and grew volume, revenue and profit, though price mix faced pressure from negative geographic mix and affordability programs. India’s top 10 brands each grew double digits, while Sprite volume in the region rose nearly 20%, Braun said.
China delivered volume growth led by trademark Coca-Cola and Fanta despite subdued consumer demand, while Japan’s volume declined amid consumer pressure and adverse weather. Japan nevertheless gained share and expanded its trademark Coca-Cola consumer base, with accelerating Coca-Cola Zero Sugar volume growth.
Updated 2026 Outlook and 2027 Considerations
Coca-Cola raised or reaffirmed several full-year 2026 targets. The company now expects:
- Organic revenue growth of at least 5%, including the effect of slight fourth-quarter destocking and six fewer days in the quarter.
- Comparable currency-neutral earnings-per-share growth, excluding acquisitions and divestitures, of at least 9%.
- Comparable earnings-per-share growth of at least 11% versus $3.00 in 2025.
- At least $13 billion in free cash flow.
The company expects divestitures to reduce comparable net revenues by about 2% and comparable earnings per share by about 1% for 2026, assuming the pending sale of Coca-Cola Beverages Africa closes in the fourth quarter, subject to regulatory approvals. It continues to expect currency to add about one point to comparable net revenue growth and about three points to comparable earnings-per-share growth for the year.
Murphy said fourth-quarter results will face six fewer selling days and anticipated slight destocking, with concentrate shipments expected to trail unit case volume slightly for the full year. The anticipated refranchising of Coca-Cola Beverages Africa is expected to create a four-point headwind to fourth-quarter comparable net revenues and a three-point headwind to comparable earnings per share.
Looking toward 2027, management said consumer emphasis on value is expected to persist across markets and income groups. The company expects the anticipated refranchising of Coca-Cola Beverages Africa to create an eight-point headwind to comparable net revenues and a two-point headwind to comparable earnings per share next year, while benefiting margins and the company’s return profile. Coca-Cola also said it continues to explore a potential initial public offering of its bottling operations in India.
About Coca-Cola (NYSE:KO)
The Coca-Cola Company NYSE: KO is a global beverage company headquartered in Atlanta, Georgia. Founded in 1886, it is best known for Coca-Cola, one of the world’s most recognized soft drink brands.
The company owns, licenses, and markets a broad portfolio of beverages, including sparkling soft drinks, water, sports drinks, coffee, tea, juice, dairy and plant-based beverages, and energy drinks. Its brands include Coca-Cola, Diet Coke, Coca-Cola Zero Sugar, Sprite, Fanta, Dasani, smartwater, Powerade, Minute Maid, Simply, fairlife, and Costa Coffee, among others.
The Coca-Cola Company serves consumers in more than 200 countries and territories through a system that includes company-operated operations, independent bottling partners, distributors, retailers, and food-service providers.
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