On October 23rd, Coca Cola Company announced its third quarter financial report. In the third quarter, Coca Cola achieved revenue of $11.854 billion, a slight decrease of about 1% year-on-year, net profit of $2.848 billion, a decrease of 8% year-on-year, and earnings per share of $0.77, an increase of 5% year-on-year.
It is worth noting that in the financial report, Coca Cola Company updated its 2024 performance guidance, updating the growth rate of comparable currency neutral earnings per share (non GAAP) to 14% to 15%, higher than the previously estimated 13% to 15%.
According to the financial report disclosed in the third quarter, the price increase continues to drive Coca Cola's performance growth. The financial report shows that the impact of price/combination on revenue increased by 10% year-on-year, with 4 percentage points driven by market pricing after inflation, and the rest driven by pricing behavior and favorable product combinations in the market.
In the first half of the year, there were reports that Hubei Taikoo Coca Cola, Jiangxi Taikoo Coca Cola, and Zhengzhou Taikoo Coca Cola successively issued notices of some product adjustments, stating that starting from the second half of April, the supply prices of some products will be adjusted, and it is recommended to adjust the retail price from 3 yuan/bottle to 3.5 yuan/bottle, with a price increase of 16%.
We expect that market pricing will be eased by inflation by 2025, and we will recover the impact of currency depreciation in these markets in 2024. Regarding the environment our products are facing, we expect prices of industrial materials to remain relatively stable, while agricultural products will continue to face volatility and price increases, "Coca Cola executives said during the earnings call.
Coca Cola's Chairman and CEO, Ken Chan, stated that the company is expected to return to a more normal structure from the fourth quarter to next year, with good results in developed countries and faster growth in emerging markets, resulting in more normal changes in price/mix. Pricing will develop towards a more normal level and to some extent fall within a more normal region, "said Zhan Kunjie
In terms of product categories, the sales performance of carbonated beverages and tea products is relatively impressive. The global sales of sugar free Coca Cola increased by 11% year-on-year, while the global sales of tea drinks increased by 7% year-on-year. The overall sales of fruit juice, value-added dairy products, and plant-based beverages decreased by 3% year-on-year, while the sales of bottled water, sports drinks, and coffee decreased by 6%, 3%, and 6% respectively.
In the Asia Pacific market, including the Chinese market, the company's product sales have declined. During the earnings conference call, Zhan Kunjie analyzed the performance of the Chinese market and said that although there is some pressure in the Chinese market, there are also some things happening, including the company's reduced emphasis on bottled water business and a greater focus on carbonated beverages.
Zhan Kunjie stated that he will focus on areas that he can control and influence in the Chinese market, including marketing, innovation, and improving execution. He reiterated the company's confidence in the long-term growth of the Chinese market and stated that it will continue to invest to seize future growth opportunities.