Coca-Cola Rides Zero Sugar Boom, Diet Coke Uptick To Solid Q3

Coca-Cola Company (NYSE:KO) shares are trading higher in the premarket session on Tuesday following the company’s report of third-quarter results.

The food and beverage giant reported third-quarter adjusted earnings per share of 82 cents, beating the analyst consensus estimate of 78 cents.

Quarterly sales of $12.5 billion (+5% year over year) outpaced the Street view of $12.394 billion. Organic revenues (non-GAAP) grew 6%.

Price/mix grew 6%, primarily driven by pricing actions in the marketplace and a favorable mix.

Also Read: Why Coca-Cola Just Sold Most Of Its Africa Bottling Empire

Quarterly Metrics

Coca-Cola’s third-quarter operating margin expanded to 32% from 21.2% a year ago. On an adjusted basis, comparable operating margin rose to 31.9% from 30.7% in the prior year. Operating income grew 59%, which included items impacting comparability and a currency headwind.

Adjusted gross margin was 61%, lower than 61.2% in the year-ago period. Unit case volume grew 1%, primarily driven by growth in Central Asia, North Africa, Brazil, and the United Kingdom.

Diet Coke Up

Sparkling soft drinks were even year over year. Trademark Coca‑Cola grew 1%, driven by growth in Europe, the Middle East, Africa and Asia Pacific.

Coca‑Cola Zero Sugar grew 14%, driven by growth across all geographic operating segments. Diet Coke/Coca‑Cola Light grew 2%, primarily driven by growth in North America and Asia Pacific.

Sparkling flavors declined 1%, as growth in Europe, the Middle East and Africa was more than offset by a decline in Asia Pacific.

Juice, value-added dairy and plant-based beverages declined 3%, as growth in Latin America was more than offset by a decline in Asia Pacific.

Water, sports, coffee and tea grew 3%. Water grew 3%, driven by growth across all geographic operating segments.

Coca-Cola Africa Sale

Earlier on Tuesday, Coca-Cola and Gutsche Family Investments disclosed a deal to sell a 75% controlling stake in Coca-Cola Beverages Africa (CCBA) to Coca-Cola HBC AG for around $3.4 billion.

Under the deal, The Coca-Cola Company will sell 41.52% of its 66.52% ownership in CCBA, while Coca-Cola HBC will also purchase the 33.48% stake held by Gutsche Family Investments.

Notably, CCBA operates in 14 African countries and represents around 40% of all Coca-Cola product sales in the region.

The sale is expected to be completed by the end of 2026.

During its conference call, Coca-Cola stated that certain consumer segments are under pressure. The company cited inflationary pressures and trade dynamics among the key factors weighing on demand.

Outlook

Coca-Cola expects its fiscal year 2025 adjusted earnings per share to be $2.97. The company expects comparable EPS (non-GAAP) growth of approximately 3%, compared to $2.88 in 2024.

The company expects to generate free cash flow excluding the fairlife contingent consideration payment (non-GAAP) of at least $9.8 billion.

This consists of cash flow from operations excluding the fairlife contingent consideration payment of approximately $12.0 billion, less capital expenditures of roughly $2.2 billion (updated from $9.5 billion).

Coca-Cola stated that its fourth-quarter 2025 results are likely to experience a slight foreign exchange tailwind to comparable net revenue, but a 4% to 5% headwind to comparable earnings per share.

The company stated that for the full year 2026, it expects slight foreign exchange tailwinds to both comparable net revenue and comparable EPS growth, based on current rates and hedges.

Price Action: KO shares were trading higher by 2.73% to $70.32 premarket at last check on Tuesday.

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