Coca-Cola Co. shares surged to open at a record high Tuesday after its latest earnings got another boost from drinks with less sugar, more than offsetting the company’s sluggish home market.
It also updated its forecast for the full year, saying it now expects to post organic revenue growth of 5%, up from the 4% target it had issued earlier. The soda giant rose as much as 4.6% as of 9:31 a.m. in New York. That’s the biggest intraday gain in six years and brings the share price to the highest level since records begin in 1968.
“I came into the year concerned; so far the strategy has produced stronger results,” Chief Executive Officer James Quincey said in an interview.
Global unit case volume rose 3% in the second quarter, helped by a 7% spike in Asia, where Chinese consumers have been key to the company’s success this year. That has triggered more investments in the region, Quincey said. But volumes slipped in North America for the third straight quarter. Coke, like its chief rival PepsiCo Inc., has struggled to boost beverage consumption in its home market, where higher prices on drinks have helped offset the volume drop.
Coke, as it tries to fend off Pepsi and other upstart competitors, has been diversifying beyond sugary drinks. Coca-Cola Zero Sugar logged a seventh straight quarter of double-digit volume growth globally, it said. The company is also pushing deeper into the canned coffee market after its high-profile acquisition of the British cafe chain Costa for $5.1 billion. Coca-Cola HBC, one of the company’s bottlers, recently said it will launch Costa Coffee in at least 10 markets in 2020, including Russia, Bulgaria, Greece and Poland.
Grappling with the strong dollar, Coke had already warned that earnings will be roughly flat this year. Despite the higher revenue guidance, it expects stronger-than-expected currency effects the rest of the year. The stock had gained 8.2% through Monday’s close, lagging the performance of PepsiCo and the S&P 500.
“We have a good strategy, we’re executing at full force and that’s what we’re focused on. Those are the bits we can control,” Quincey said. “The macros will be more helpful or less helpful, but we’re really focused on what we can control.”