Coca-Cola (KO) kicked off 2025 with a solid first-quarter performance, showcasing its resilience amid ongoing currency pressures and structural shifts. Net revenues declined 2% year-over-year to $11.13 billion, primarily due to unfavorable currency exchange and the refranchising of bottling operations. However, the underlying health of the business remained strong, as organic revenues rose 6%, fueled by 5% price/mix growth and a 1% increase in concentrate sales.

Profitability saw a notable improvement, with operating income surging 71% to $3.66 billion, reflecting one-time gains. On a comparable basis, operating income grew 4% to $3.79 billion. Coca-Cola also achieved significant margin expansion, with a reported operating margin of 32.9%, up sharply from 18.9% a year ago, and a comparable margin of 33.8%, up from 32.4%. GAAP EPS increased 5% to $0.77, while comparable EPS rose 1% to $0.73.

While free cash flow was negative $5.51 billion due to the $6.07 billion contingent payment for fairlife, excluding this outlay, free cash flow improved to $558 million, up from $158 million in the prior-year quarter. Net income also rose 5% to $3.33 billion.

Regionally, performance was led by Latin America, with 13% organic revenue growth and an 18% increase in currency-neutral operating income, despite a modest decline in net revenues. EMEA delivered 7% organic growth and a 3% volume increase, while North America saw 3% organic growth, though unit case volume fell 3%. Asia Pacific posted 7% organic growth and strong 6% volume gains, particularly in India and China. The Bottling Investments Group underperformed, with revenue down 20% and volume off 17%, reflecting the impact of structural changes.

In terms of product categories, global unit case volume rose 2%, driven by emerging markets. Sparkling soft drinks climbed 2%, including a standout 14% gain for Coca-Cola Zero Sugar. Growth was also seen in water, sports, coffee, and tea (+2%), and juice, dairy, and plant-based beverages (+1%).

Capital allocation remained active, with $89 million in dividends paid, $370 million in share repurchases, and $3.43 billion in net financing inflows from new debt. Cash and equivalents ended the quarter at $8.42 billion, down from $10.44 billion a year earlier.

Items affecting comparability included a $331 million gain from the partial sale of Coca-Cola Europacific Partners, $25 million in Latin America asset impairments, and $47 million in fairlife-related charges.

CEO James Quincey emphasized the strength of Coca-Cola’s diversified global model, citing its ability to “navigate a complex external environment” while remaining close to the consumer.

Looking ahead, the company reaffirmed its full-year guidance for 5–6% organic revenue growth and expects 2–3% EPS growth (comparable), alongside 7–9% currency-neutral EPS growth. Free cash flow, excluding the fairlife payment, is projected at approximately $9.5 billion, though currency headwinds are expected to shave 2–3% off revenues and 5–6% off EPS.

Overall, Coca-Cola delivered robust underlying performance in Q1 2025, reinforcing confidence in its long-term strategy despite external challenges.