Higher Margins Sweeten Coca-Cola’s Q2, Yet Volume Struggles Persist

The Coca-Cola Company (NYSE:KO) on Tuesday reported mixed second-quarter 2025 earnings and revenue. The food and beverage giant reported adjusted earnings of 87 cents per share, beating the consensus of 83 cents.

Net revenues grew 1% to $12.50 billion, almost in line with the consensus of $12.54 billion, and organic revenues grew 5%. Revenue performance included a 6% growth in price/mix and a 1% decline in concentrate sales, which were in line with unit case volume.

Operating margin was 34.1%, and comparable operating margin was 34.7%. Comparable operating margin expansion was driven by organic revenue growth, the timing of marketing investments, and effective cost management, partially offset by currency headwinds.

Also Read: PepsiCo To Launch Cane Sugar-Based Prebiotic Cola This Fall To Counter Declining Soda Consumption

Unit case volume declined 1%, as growth in Central Asia, Argentina, and China was more than offset by declines in Mexico, India, and Thailand.

Sparkling soft drinks declined 1%. Trademark Coca-Cola declined 1%, as growth in Europe, the Middle East, and Africa was more than offset by a decline in Latin America.

Coca-Cola Zero Sugar grew 14%, driven by growth across all geographic operating segments. Sparkling flavors declined 2%, 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 4%, as growth in Latin America was more than offset by a decline in Asia Pacific.

Water, sports, coffee and tea was even. Water was even, as growth in Asia Pacific and Europe, Middle East and Africa was offset by a decline in Latin America.

Sports drinks declined 3%, as growth in North America was more than offset by a decline in Latin America. Coffee grew 1%, primarily driven by growth in Asia Pacific. Tea was even, as growth in Europe, Middle East and Africa was offset primarily by a decline in North America.

View more earnings on KO

This fall, as part of its ongoing innovation, the company plans to launch a new U.S. cane sugar-based offering in the United States, expanding its Trademark Coca-Cola product range to provide more choices. This announcement follows recent public commentary, including a social media post by President Donald Trump last week, indicating prior discussions and agreement on the change with company executives.

In the second-quarter earnings conference call, Coca-Cola’s CEO attributed volume declines in North America to continued uncertainty and pressure on some socioeconomic segments of consumers.

Additionally, the CEO noted that early monsoon and geopolitical conflict during the summer season negatively impacted volumes in India.

Coca-Cola’s CFO has indicated that the company no longer expects margins to be back-half weighted in 2025 due to strong margin expansion in the first half of the year.

The company has indicated that the headwinds it faced from Hispanic consumers are largely resolved. Earlier in 2025, Coca-Cola experienced a decline in sales among Hispanic consumers, particularly in the U.S. and northern Mexico.

This downturn was primarily driven by the spread of a false viral video on social media, which claimed the company reported undocumented Latino workers to immigration authorities. The controversy led to calls for a boycott and resulted in temporary volume declines, especially in southern U.S. states and border regions.

Guidance

For fiscal 2025, Coke narrowed its outlook for comparable earnings per share growth to 3% versus $2.88 in 2024, the top end of the previously provided range of 2%-3%.

The company reiterated its forecast that organic revenue will increase 5% to 6% in 2025. Coca-Cola expects to deliver comparable currency-neutral EPS growth of approximately 8%, compared to prior guidance of 7%-9%.

For the third quarter of 2025, Coke forecasts comparable net revenues to include an approximate 1% currency headwind. Comparable EPS percentage growth is expected to include a 5% to 6% currency headwind.

Price Action: At last check Tuesday, KO stock was trading lower by 0.86% to $69.47.

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