James Quincey
Chairman and Chief Executive Officer at Coca-Cola
Thanks, Robin, and good morning, everyone. We are pleased with our 2024 results, which include volume growth, robust organic revenue growth and comparable gross and operating margin expansion. This led to a 7% comparable earnings per share growth despite nearly double-digit currency headwinds and the impact of bottler refranchising. These results reflect the continuation of delivering on our long-term commitments through our all-weather strategy, we've demonstrated we have agility to navigate what comes at us and continue to grow comparable earnings per share. Given the strong momentum of our business, we are confident we can deliver on our 2025 guidance and longer-term objectives. With that as context, I'll next provide perspective on our industry and review our business performance across our segments in the 4th-quarter. Then I'll explain how we're executing our strategy by amplifying what is working and fine-tuning where needed. John will end by discussing our financial results in more detail and providing an overview of our 2025 guidance. One of Our fundamental strengths is that we operate in a great industry with steady growth. No matter how you slice it by consumer, by customer, by beverage category, by geography, we have vast opportunities ahead of us. During the quarter, we leveraged the power of our portfolio and the local expertise of our franchise system to capitalize on these opportunities. We won overall share and had broad-based share gains across our global beverage categories. We're making progress across our total beverage portfolio, delivering ongoing growth in sparkling soft drinks as well as momentum in other categories like value-added dairy and tea, which are reaching global scale while remaining tailored to local consumer needs. And we're continuing to strengthen alignment across our system and we believe our global franchise model, which operates locally is an advantage to drive long-term balanced growth. During the quarter, while our operating environment remained dynamic, consumer demand held up well and our industry remained strong. Starting in Asia-Pacific, in Asian and South Pacific, we grew volume during the quarter and benefited from successful integrated marketing campaigns like FoodMarks, which was activated in over 7,000 outlets and led to trademark Coca-Cola volume growth. Our system also drove affordability by increasing refillable offerings and focusing on attractive price points. Refillable offerings contributed to approximately one-third of Asiana South Pacific volume growth in 2024. In China, despite continued macro headwinds, we grew volume during the quarter and while early, we're seeing improved trends across our business. Trademark Coca-Cola continues to gain share and Sprite, Phanta and each improved volume performance. Our system is stepping up integrated execution in 2024 by accelerating placement of cold drink equipment and activating integrated marketing campaigns in key channels. In Japan and South Korea, we grew volumes during the quarter. Innovation was a strong contributor to growth, led by resurgence of and a number of other brands. We're continuing to benefit from steady performance from Trademark Coca-Cola and stepped-up integrated execution in key channels. In India, our business rebounded nicely during the quarter and we grew volume. We recruited consumers with innovative marketing campaigns that link Coca-Cola with music, Sprite with travel and thumbs-up with movies. And Mazza is now our 30th billion brand. In 2024, our system added approximately 440,000 outlets to our digital customer platforms in India, which provides more opportunities to better tailor our product, price and packaging offerings. Moving on to EMEAS. In Europe, volume declined during the quarter with mixed performance across Western and Eastern markets. Despite volume pressure, we grew both revenue and profits. We're engaging consumers with experiential marketing campaigns like the World Needs More Santas for Trademark Coca-Cola and by linking our brands to new occasions like Sprite with spicy meals. Also, innovation velocities and multi-year innovation success rates both performed well in 2024. We're seeing good traction on Fuse Tea, PowerAid Zero, Jack and Coke and Absolute Sprite. In Eurasia and Middle-East, despite a confluence of continued macro headwinds, we returned to volume growth during the quarter. We're emphasizing the localness of our business and seeing positive responses. For example, the made-in made by campaign in Turkiya led to strong volume growth for Trademark Coca-Cola. Fuse tea also had good momentum across the region. Our system is driving affordability and stepping up integrated execution by increasing cooler placement and share of visible inventory during the year. In Africa, volume declined during the quarter, driven primarily by pressure in North Africa and Nigeria and partially offset by strong volume momentum in South Africa. We took action during the quarter by adjusting our pack-price architecture to further drive affordability. Our system is investing for the long-term, adding refillable offerings, placing more cold drink equipment and increasing manufacturing capacity in 2024. In Latin-America, despite some macroeconomic pressures, we grew volume, revenue and profit during the quarter. We drove trial and recruited weekly plus drinkers for Trademarker Coca-Cola in 2024 by better linking the brand to the meal occasion. Also, to drive balanced top-line growth, our system focused on increasing single-serve offerings. Over 90% of our fragmented trade customers are now on our systems digital customer platforms, allowing for greater opportunity to tail out offerings to customers' individual needs. Lastly, in North-America, we grew both transactions and volume and had robust top-line and profit growth during the quarter. Trademark Coca-Cola and Fairlife remain leaders in at-home retail sales growth. Sparkling Flavors gained share during the quarter due to successful limited tiny innovations like Sprite, Winter Spice Cranberry and Phanta Beetlejuice and stepped-up integrated execution focused on increased point-of-sale messaging and increased share of visible inventory. Consumers responded well to value messaging in away-from-home channels and we increased distribution of key affordable and premium offerings and benefited from product, package and channel mix in the quarter. To sum everything up, we have good momentum in our business. We're responding to-market dynamics locally to execute on our global objectives. While we're delivering on our near-term commitments, we're also investing to improve execution, build capabilities and get more granular across our strategic growth flywheel. And networks marketing model is integrating product, digital, live and retail experiences and we are harnessing passion points to connect with consumers in more personalized ways. One great example, Phanta Halloween was our first-ever global Halloween activation and we scaled to nearly 50 markets. Partnering with Warner Brother Pictures, we created a limited-time Santa Beetlejuice haunted apple flavor. Consumers scan packages to access personalized experiences and we replicated the Beetlejuice afterlife train taking over train stations, trams and metros. The campaign was activated in-store with our largest customers and contributed to Sparkling share gain during the quarter. Our culture increasingly emphasizes acting boldly, learning and scaling successes. This year, for the first time, our Coca-Cola Christmas ad was created with generative AI, combining emerging technology with human creativity, which allowed us to produce the ad faster and at a lower-cost. The power of emerging technologies like generative AI are still at early stages and we will continue to lead and iterate our approach. We are seeing tangible results from our marketing transformation. Over the past three years, Coca-Cola's retail sales have increased approximately $40 billion. According to Time Magazine, Coca-Cola, Minute Made and Fair Life were named world's best brands in their respective beverage categories in 2024. While we're building capabilities in marketing, we're also focusing on innovation that prioritizes bigger and bolder bets. Each of our innovations has clear objectives. Sometimes we innovate to create short-term buzz like Coke and Oreo or Sprite Winter Spice Cranberry. In other instances, we innovate for lasting impact. This year, we focused on sustaining investments behind key innovations to improve multi-year success rates and drive greater impact. This is paying-off as fuse tea grew retail value three times faster than the tea category, Topo Chico suborders continued its momentum and Minute May Zero Sugar realized strong growth. In 2024, innovation contributed strongly to revenue growth and our innovation success rates improved versus prior year. We're excited about our innovation pipeline for 2025. Moving across our top-line flywheel, our system is investing heavily in digital capabilities and sticking to the fundamentals of commercial excellence to accelerate consumer recruitment, increase consumption and win in the market. Ensuring product availability is one of our system's greatest strengths, yet we still have tremendous opportunity. While our system improves share of visible inventory in 2024 and our brands are found in 33 million outlets, there remains ample headroom to increase outlet coverage, reduce out-of-stocks and better tail our offerings with the right placements. Basket incidents is another opportunity. Winning just one point of global beverage incidents translates into over $40 billion in additional retail sales. To drive basket incidents, our system is focused on better activating integrated marketing campaigns in key channels, increasing point-of-sale displays and winning impulse loans outside the traditional beverage aisle. Finally, cold drink equipment is one of the strongest consumption drivers in our systems toolbox with approximately 14 million units of cold drink equipment present in our approximately 33 million customer outlets, we have significant opportunity to drive consumption by placing more cold drink equipment. In 2024 , our system invested to add nearly 600,000 coolers, strong commercial execution is enabled by our revenue growth management capabilities, which fuel both top-line growth and margin expansion. We're driving affordability and premiumization across our total beverage portfolio. The strong elasticities we are realizing today are a testament to the progress we're making in this area. By focusing on availability, basket incidents and cold drink equipment, coupled with great marketing, innovation and revenue growth management, our system recruited weekly drinkers, grew volume and won share in 2024. While we've made steady progress executing our all-weather strategy in 2024, we're operating with a mindset that we're only just getting started. As we turn the page to 2025, we anticipate the year will bring both opportunities and challenges. While we expect the external environment will be dynamic, several underpinnings remain constant. One, we operate in a great industry; two, we have many opportunities available to us and we are primed to capture these and deliver sustained performance. Three, our powerful portfolio of brands, pervasive distribution system and the unwavering dedication of our system employees are clear advantages. Next Tuesday at CAGNY, I look-forward to sharing more about how we're leading to deliver results in all types of backdrops and I encourage everyone to listen. With that, I'll turn the call over to John.Thank you, James, and good morning, everyone. We closed the year with strong 4th-quarter results. And as James said earlier, we delivered 7% comparable earnings per share growth in 2024 on-top of 6% average comparable earnings per share growth over the prior five years. During the 4th-quarter, we grew organic revenues 14%. Unit case growth was 2%, which is in-line with our multi-year trend. Concentrated sales grew 3 points ahead of unit cases, driven primarily by two additional days in the quarter and the timing of concentrated shipments. Our price/mix growth of 9% was driven by two items: approximately 8 points of pricing split somewhat evenly between normal pricing actions across our markets and intense inflationary pricing in a handful of markets experiencing currency devaluations and approximately 1 point of favorable mix. Excluding the impact of intense inflationary pricing, organic revenue growth was above our long-term growth algorithm. Comparable gross margin was up approximately 160 basis-points and comparable operating margin was up approximately 80 basis-points. Water refranchising had a greater benefit to comparable gross margin and currency headwinds had a larger impact to comparable operating margin. Putting it all together, 4th-quarter comparable EPS of $0.55 was up 12% year-over-year despite 11% currency headwinds and 4% headwinds from refranchising. Free-cash flow, excluding the IRS tax litigation deposit was $10.8 billion in 2024, an increase of 11% versus prior year. This increase was primarily driven by strong business performance and timing of working capital initiatives, partially offset by higher capital expenditures and higher tax payments. In 2024, adjusted free-cash flow conversion was 93%, which is within our long-term targeted range. Our balance sheet is strong and our net-debt leverage of 1.8 times EBITDA is below our targeted range of 2 to 2.5 times. If you include our latest estimate of $6.2 billion related to our Fair Life contingent consideration payment, our expected net-debt leverage would be at the low-end of our target range. As James mentioned, 2025 will likely bring both opportunities and challenges. Enabled by our all-weather strategy, we have demonstrated our ability to deliver on our objectives and drive long-term growth. Our 2025 guidance builds on the enduring momentum of our business. We expect organic revenue growth of 5% to 6% and comparable currency-neutral earnings per share growth of 8% to 10%, both of which reflected delivery at the high-end of our long-term growth algorithm. We continue to focus on driving balanced volume and price-mix and anticipate intense inflationary pricing will play a smaller role in 2025 and will moderate throughout the year. Bottle refranchising is expected to be a slight headwind to comparable net revenues and comparable earnings per share as we cycle the impact of bottle refranchising in 2024. We'll continue to invest appropriately behind our brands while also driving productivity across all areas of marketing. Next week at CAGNY, we'll discuss further how our marketing transformation and enhanced resource allocation capabilities give us confidence in our ability to continue to drive more productivity. And we expect interest expense to be elevated versus prior year, we believe the step-up is manageable and we're not expecting significant leverage or deleverage below-the-line. Based on current rates and our hedge positions, we anticipate an approximate three to four point currency headwind to comparable net revenues and an approximate 6 to 7 point currency headwind to comparable earnings per share for full-year 2025. Our underlying effective tax-rate for 2025 is expected to increase to 20.8%, which is driven primarily by the impact of several countries enacting the global minimum tax regulations. All-in, we expect comparable earnings per share growth of 2% to 3% versus $2.88 in 2024. Excluding the Fair Life contingent consideration payment, we expect to generate approximately $9.5 billion of free-cash flow-in 2025 through approximately $11.7 billion in cash from operations, less approximately $2.2 billion in capital investments. Included in this guidance are two items to highlight. One, a $1.2 billion transition tax payment, an increase of approximately $240 million versus 2024. This is the final year that we will make a payment-related to the Tax Cuts and Jobs Act of 2017. Number two, we expect that part of the timing of working capital initiatives that benefited 2024 free-cash flow will reverse and impact 2025 free-cash flow. Driven by our underlying cash-flow generation, we have flexibility to invest in our business and return capital to shareowners. A significant portion of our expected capital investment is to build capacity for Fair Life and to continue to invest in our system in India and Africa. With respect to acquisitions and divestitures, we're making good progress on our agenda. Since 2006, we've added $9 billion brands via acquisition. Importantly, only three of these brands were $1 billion brands at the time of acquisition, demonstrating progress in scaling acquisitions. In 2024, We realized $3.5 billion in gross proceeds from refranchising. Bottling investments as a percent of consolidated net revenue is 13%, down from 52% in 2015. Return on invested capital is up six points over the same time. Related to capital return, we have an unwavering priority to grow our dividend as we've done for 62 consecutive years. Our dividend is supported by our long-term free-cash flow generation. In 2024, dividends paid as a percent of adjusted free-cash flow was 73%. On share repurchases, we've typically repurchased shares to offset any dilution from the exercise of stock options by employees in the given year. Our capital allocation policy prioritizes agility
