Coca-Cola on Monday reported first-quarter earnings and sales that easily beat forecasts: Sales jumped 16% to $10.5 billion, beating Wall Street expectations of $9.8 billion. Earnings of $2.8 billion, or 64 cents per share, were up 24% from a year ago, beating consensus estimates of 58 cents per share.
Price increases were a major driver of strong numbers. Coca-Cola said its price/mix, a measure of what it charges customers, rose 7% globally and 11% in North America.
“The overall inflationary environment is going to be here for a while. Exactly how long, no one knows,” Coke Chief Financial Officer John Murphy said in an interview with CNN Business Monday morning.
“When I look back on the last two years, one of the biggest results was that we used that time to clean out the closet. Now we’re rebuilding it again,” Murphy said. “It’s important to stay disciplined and keep a close eye on brands that are performing well. We need to keep the portfolio pruned.”
Traders have flocked to consumer-heavy staple companies like Coca-Cola because they offer sales and earnings stability in a time of geopolitical turmoil, concerns over Federal Reserve rate hikes and the inflation. Coke also pays a regular dividend which yields almost 3%.
Coke continues to do well internationally even as the latest spike in Covid-19 cases worries investors. The company’s sales jumped 34% in Latin America and 13% in Europe, the Middle East and Africa.
As part of its global strategy, Coke continues to invest heavily in emerging markets, Murphy said.
“We need to stay close to those markets and adapt as necessary,” Murphy said. “Investing in times of volatility will allow you to prevail.”