The Coca-Cola Company Q4 FY2025 earnings call

• James Quincey highlighted it was his last earnings call, reflecting on achieving 4 strategic priorities over a decade, including adding 12 billion-dollar brands, reinvigorating legacy sparkling brands, strong alignment with bottling partners, digitization progress, and building a growth-focused culture. - Henrique Braun discussed 2025 performance, noting delivering on guidance, gaining value share for 19 quarters, volume improvement in the fourth quarter, and regional performance by North America, Latin America, EMEA, Eurasia/Middle East/Africa, and Asia Pacific. He emphasized responding to market dynamics, investing for growth, and focusing on increasing billion-dollar brands and improving innovation, consumer connection, and digital integration. - John Murphy reviewed 2025 financials, including organic revenue growth, unit case growth, price/mix, margin expansion, EPS growth despite headwinds, and strong free cash flow. He also discussed 2026 guidance and capital allocation.

In 2025, despite a complex external environment, Coca-Cola delivered on initial top-line and bottom-line guidance. North America delivered strong results with broad-based strength across the total beverage portfolio, gaining volume and value share. Latin America gained value share and grew volume, revenue, and comparable currency-neutral operating income, with brands like Coca-Cola Zero Sugar and Sprite Zero Sugar performing strongly. EMEA gained value share and grew volume and revenue, with campaigns focused on holidays and the Winter Olympics. Eurasia, Middle East, and Africa grew volume, leveraging local innovations and marketing campaigns. Asia Pacific gained better share but had flat volume with revenue and profit declines, offset by Japan's volume growth but impacted by softer consumer spending and industry performance. Organic revenue growth was in line with long-term growth algorithm, with unit case volume flat in 2025 but improving in the fourth quarter.

For 2026, Coca-Cola expects organic revenue growth of 4%-5% in line with long-term growth algorithm. It anticipates growth in comparable currency-neutral earnings per share (excluding acquisitions and divestitures) of 5%-6%. Free cash flow is expected to be approximately $12.2 billion in 2026. Divestitures are expected to be a ~4-point headwind to comparable net revenues and ~1 point headwind to comparable EPS. There is an approximate 1 point currency tailwind to comparable net revenues and ~3 point currency tailwind to comparable EPS for full year 2026. Underlying effective tax rate is expected to be 20.9%, and comparable EPS growth is expected to be 7%-8% versus $3 in 2025.

• Macroeconomic pressure on lower-income consumers in some regions. - Currency headwinds, including 5 points of currency headwinds in 2025 impacting EPS. - Regulatory changes and market volatility, such as the Mexican excise tax which could cause volume volatility. - Market-specific challenges in regions like Asia Pacific due to softer consumer spending, weaker industry performance, and prior-year strong growth cycling.

Q: Dara Mohsenian asked about the balance between price/mix and volume in 2026, referencing Q4 price/mix results.

A: James Quincey explained that taking a 4-quarter view shows underlying price at 4% and volume at 1%, and that 2026 guidance reflects a balanced mix of volume and price with a need for volume to build back in certain countries.

Q: Stephen Robert Powers inquired about general operating conditions and contributions from emerging vs. developed markets in 2026.

A: James Quincey stated that conditions are like light drizzle, expecting a balance between volume and price, with India, China, and some ASEAN/European markets needing to build back volume.

Q: Lauren Lieberman asked about long-term view of North America operating margin expansion.

A: John Murphy said North America has been a performer, with about 60 basis points average operating margin expansion over 8 years, and there's still opportunity for continued improvement.

Q: Christopher Carey asked about challenging markets in 2025 and overcoming challenges in 2026.

A: Henrique Braun discussed leveraging world performance, with strategies in APAC, India, and Mexico to navigate challenges and drive towards long-term growth.

Q: Filippo Falorni asked about North America business in 2026, including fairlife capacity and World Cup activation.

A: Henrique Braun noted North America had momentum in 2025, with fairlife continuing growth and plans to leverage the World Cup for activation.

Q: Robert Ottenstein asked about currency approach, guidance, and philosophy.

A: John Murphy explained the hedging strategy to manage local market focus and grow U.S. dollar earnings, with 2026 currency tailwinds driven by a weaker dollar in certain markets.

Q: Andrea Teixeira asked about impact of SNAP changes in U.S. and Mexican tax.

A: James Quincey said SNAP changes are manageable, and Henrique Braun discussed navigating Mexican tax with World Cup campaigns and system alignment.

Q: Peter Galbo asked about mix impact and equity income hit.

A: John Murphy detailed mix drivers and mentioned the equity income hit from the sale of consolidated shares.

Q: Peter Grom asked about cash flow and capital allocation strategy.

A: John Murphy outlined capital allocation towards business investments, dividend growth, and flexibility on inorganic opportunities and share repurchasing.

Q: Kaumil Gajrawala asked about EPS slowdown in 2026.

A: John Murphy said it reflects top-line dynamics, investment ahead of the curve, and structural cycling.

Q: Charlie Higgs asked about James Quincey's role as Executive Chairman and Henrique Braun's innovation plans.

A: James Quincey discussed the Executive Chairman role, and Henrique Braun highlighted focus on local innovation, growing billion-dollar brands, and leveraging insights.

Q: Carlos Laboy asked about marketing/innovation investments in India and digital demand fulfillment.

A: Henrique Braun discussed investing ahead of the curve in India, including digital platforms like Coke Buddy to drive growth.