Coca-Cola Company (The)
KO · NYSE
Next quarter
Reports Oct 20, 2026.
Consensus is $0.87 EPS for Sep 2026 across 8 estimates, ranging $0.81 to $0.89.
KO Jun 2026
- 5.43%
- +0.92%
- $0.92
- $0.97
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Highlights
- Earnings beat: Comparable EPS rose 11% to $0.97, topping the $0.92 consensus by $0.05, or 5.43%; reported diluted EPS increased 16% to $1.03 from $0.88.
- Revenue growth: Net revenue increased 7% to $13.38 billion from $12.54 billion, while organic revenue rose 6%; the prior quarter generated $12.47 billion.
- Demand remained broad-based: Global unit case volume grew 5%, led by Asia Pacific at 8%, EMEA at 4%, and 3% growth in both North America and Latin America.
- Margin expansion: Reported operating margin increased 77 basis points to 34.9%, while comparable operating margin expanded 86 basis points to 35.6%; comparable currency-neutral operating income grew 6%.
- Brand momentum: Coca-Cola Zero Sugar volume grew 16%, Trademark Coca-Cola grew 5%, and Powerade volume increased 8%, with FIFA World Cup activation contributing to growth.
- North America strengthened: Revenue grew 7% to $5.41 billion and comparable currency-neutral operating income rose 12% to $1.77 billion, supported by 3% volume growth, 4% price/mix, and lower operating expenses.
- Regional trade-offs: Asia Pacific volume grew 8% but price/mix declined 9%, leaving comparable currency-neutral operating income flat; EMEA comparable currency-neutral operating income declined 5%.
- Guidance raised: Full-year organic revenue growth is now expected at approximately 5%, comparable EPS growth at 9%-10%, and free cash flow at approximately $12.4 billion.
- Cash generation improved: Six-month operating cash flow was $7.54 billion and free cash flow was $6.86 billion, versus operating cash flow of negative $1.39 billion in the year-ago period.
Analysis
Coca-Cola delivered a stronger-than-expected second quarter, with comparable EPS of $0.97 versus the $0.92 consensus and 11% year-over-year growth. Reported diluted EPS was $1.03, up from $0.88 a year ago and $0.91 in the prior quarter. Revenue rose 7% to $13.38 billion from $12.54 billion last year, above the $12.47 billion generated in the preceding quarter. Organic revenue increased 6%, reflecting 4% concentrate sales growth and 2% price/mix, while currency contributed roughly two percentage points to reported revenue growth.
The print was defined by a combination of volume-led growth, operating leverage and a higher outlook. Global unit case volume rose 5%, with especially strong performance in Asia Pacific and continued momentum in Coca-Cola Zero Sugar. Comparable currency-neutral operating income grew 6% despite higher input costs and increased marketing investment, as lower operating expenses and revenue growth supported an 86-basis-point comparable margin expansion to 35.6%. Management raised full-year organic revenue guidance to approximately 5% growth and comparable EPS guidance to 9%-10%. The main offsets were Asia Pacific’s 9% price/mix decline and flat currency-neutral operating income, weaker EMEA profit performance, and ongoing uncertainty around the IRS tax dispute.
Volume and brand momentum
Consumer demand was the central strength of the quarter. Global unit case volume increased 5%, with growth led by India, China, the United States and Brazil. Volume growth outpaced concentrate sales by one percentage point because of shipment timing.
- Core sparkling: Sparkling soft drink volume grew 4%; Trademark Coca-Cola increased 5%, Coca-Cola Zero Sugar rose 16%, Diet Coke/Coca-Cola Light grew 7%, and sparkling flavors increased 4%.
- Other categories: Water, sports, coffee and tea grew 6%, led by 6% water growth, 5% sports growth and 6% tea growth; coffee declined 2%.
- Geographic demand: Asia Pacific volume grew 8%, EMEA 4%, and both North America and Latin America 3%.
- Marketing and innovation: FIFA World Cup activity supported part of the 5% Trademark Coca-Cola volume growth and 8% Powerade growth. Innovation, including Coca-Cola Zero Zero, Sprite+Tea and BODYARMOR FIT, also contributed to volume gains.
Revenue and margin expansion
Revenue growth combined healthy demand with modest pricing and favorable currency. Net revenue increased 7% to $13.38 billion, while organic revenue grew 6%. Price/mix was positive in most regions but remained a constraint in Asia Pacific.
- Revenue drivers: Concentrate sales increased 4%, price/mix contributed 2%, currency added 2%, and acquisitions and divestitures reduced growth by 1 percentage point.
- Profitability: Operating income increased 9% to $4.67 billion. Comparable currency-neutral operating income rose 6%, as organic revenue growth and lower operating expenses outweighed higher input costs and increased marketing investment.
- Margins: Reported operating margin rose from 34.1% to 34.9%; comparable operating margin increased from 34.7% to 35.6%. Comparable currency-neutral margin expanded 44 basis points to 35.2%.
Regional performance
North America provided the clearest improvement in underlying profitability, while Asia Pacific delivered strong volume but required affordability actions that diluted monetization. Latin America benefited from currency and reported profit growth, whereas EMEA remained more challenged.
- North America: Revenue rose 7% to $5.41 billion, volume grew 3%, and comparable currency-neutral operating income increased 12% to $1.77 billion. The company cited 4% price/mix and lower operating expenses, partly offset by input costs and marketing.
- Latin America: Revenue increased 16% to $1.84 billion, including an 11% currency benefit, while comparable currency-neutral operating income grew 4% to $1.17 billion. Brazil and Mexico led value-share gains.
- Asia Pacific: Volume grew 8%, but price/mix fell 9% because of unfavorable mix and affordability initiatives. Revenue rose only 1% to $1.58 billion, and comparable currency-neutral operating income was flat.
- EMEA: Revenue increased 2% to $3.24 billion, but comparable currency-neutral operating income declined 5% to $1.31 billion as higher operating expenses and marketing investment outweighed growth.
Raised outlook and cash flow
Management raised the full-year outlook after the first-half performance, while cash generation recovered sharply from the working-capital pressure seen in the prior-year period.
- 2026 revenue outlook: Organic revenue growth is now expected at approximately 5%, versus the previous 4%-5% range. Comparable net revenue guidance assumes roughly a 1% currency tailwind and a 2%-3% headwind from acquisitions and divestitures.
- 2026 earnings outlook: Comparable currency-neutral EPS excluding acquisitions and divestitures is expected to grow 7%-8%, up from 6%-7%; comparable EPS growth is now expected at 9%-10%, versus 8%-9% previously.
- Cash flow: Six-month operating cash flow was $7.54 billion and free cash flow was $6.86 billion after $684 million of capital expenditures. Full-year free cash flow guidance increased to approximately $12.4 billion.
Tax and operating risks
The quarter also included non-operating items and ongoing exposures that make reported earnings less representative of underlying operating performance. Coca-Cola continues to contest a large IRS transfer-pricing assessment, while the filing disclosed a ransomware incident at fairlife.
- IRS litigation: Coca-Cola has paid $6.0 billion in tax and interest related to the 2007-2009 dispute. Its tax reserve was $529 million at July 3, 2026, and the company estimates potential incremental tax and interest liabilities for 2010-2025 of approximately $14 billion as of December 31, 2025.
- Reported earnings items: The quarter included a $66 million reduction in the impairment charge on African bottling operations held for sale and $298 million of unrealized gains on equity securities still held at quarter-end.
- Fairlife incident: A ransomware event temporarily suspended some fairlife production, but management said most operations had resumed and that the incident was not reasonably likely to have a material impact on financial condition or results.
