The Coca-Cola Company, a global leader in beverage markets, released its financial results for the fourth quarter of 2025 during a conference call that featured remarks from key executives and an interactive question-and-answer session with analysts. This quarter's report reflected the company's ability to sustain growth in a challenging economic environment and underscored a significant leadership transition.
Chairman and CEO James Quincey opened the call by expressing gratitude for the sustained support from investors, employees, and partners over his tenure. He outlined the substantial progress achieved since setting strategic priorities nearly a decade ago at the 2017 Consumer Analyst Group of New York (CAGNY) meeting. These priorities focused on accelerating consumer-centric brand portfolios, strengthening the operational system, digitizing the enterprise, and unlocking workforce potential.
Since 2017, Coca-Cola has added $12 billion in beverage brands to its portfolio, raising the total valuation of its brands to $32 billion. Notably, 75% of its billion-dollar brands now exist outside the sparkling soft drink category, reflecting broad diversification. The company revitalized growth in their flagship sparkling soft drink, Trademark Coca-Cola, which now commands over $60 billion in retail sales and is recognized as the highest valued food and beverage brand globally according to Kantar.
Alignment with bottling partners has improved markedly, creating a virtuous cycle of increased returns, investment, and value creation. The company has progressed in digital transformation efforts, enhancing personalization in consumer and customer engagement. Additionally, the corporate culture emphasizes risk-taking and iterative learning, positioning the workforce and its growth mindset as critical assets. As a result, the company achieved a 7% average organic revenue growth rate since 2017 and increased comparable earnings per share to $3 in 2025, overcoming longstanding currency headwinds.
Quincey introduced Enrique Braun, the Chief Operating Officer and CEO-elect, who acknowledged the enduring leadership legacy and outlined the company's 2025 operational highlights. Despite external complexities, Coca-Cola met its initial top-line and bottom-line objectives. The company sustained value share gains for 19 consecutive quarters, with organic revenue growth consistent with its long-term growth algorithm and flat unit case volume for the year. Volume improved sequentially throughout the fourth quarter, demonstrating momentum.
Operating margin expansion was driven by continued efficiency initiatives, contributing to a 4% increase in comparable earnings per share despite currency headwinds and a higher effective tax rate. The North American segment performed strongly amid macroeconomic pressure, recording gains in volume, revenue, and operating income. Key brands such as Trademark Coca-Cola, Sprite Zero, Fresca, Desane, Fairlife, Body Armor Trademark, and Powerade each posted volume growth. Innovations like Sprite Chill and Cocoa Holiday Creamy Vanilla resonated with consumers, and strategic focuses included accelerating cold drink equipment placement and expanding value offerings.
Latin America saw growth in volume, revenue, and operating income, with value-share gains attributable to targeted strategy execution and activation of consumer passion points including Halloween's promotion of Fanta. Refillable packaging and attractive pricing strategies also contributed, particularly in Mexico where a value-added dairy brand, Santa Clara, became part of the billion-dollar brand family.
In EMEA, the company gained value share and increased volume and revenue. European markets experienced initial volume declines followed by recovery stimulated by holiday season and Winter Olympics-focused campaigns. Market-specific initiatives linked the English Premier League partnership in the UK and the promotion of a music festival and Olympic torch relay activities in Italy.
Eurasia, the Middle East, and Africa regions recorded volume growth driven by local market innovations such as Sprite Lemon Mint and impactful marketing campaigns like Schweppes Born Social 2.0 and Share a Coke in Nigeria, alongside a sharpened focus on the localness of the system and revenue management capabilities.
Asia Pacific delivered value-share gains and flat volume; however, revenue and profit declined primarily due to soft consumer spending, industry softness, and comparatives to strong prior-year growth. Investments continue in long-term growth opportunities with granular channel execution plans and tailored brand price architectures emphasizing competitive price points.
Looking toward 2026, the company plans to maintain agility by adapting to market dynamics, leveraging its extensive portfolio, and investing for sustained growth. Braun emphasized the need for a balance between continuity in successful practices and evolution for increased efficiency and effectiveness. He highlighted three priority areas: enhancing recruitment of young adult consumers through integrated marketing and commercial execution; accelerating innovation guided by deep consumer insights to anticipate future beverage trends; and embedding digital technology at the core of consumer, customer, and system interactions.
John Murphy, President and CFO, summarized the 2025 financial performance and issued 2026 guidance. The fourth quarter saw a 5% increase in organic revenues, a 1% rise in unit case growth, and a 3-point outperformance of concentrate sales relative to volume driven by shipment timing and an extra day in the quarter. Price-mix growth was 1%, influenced by approximately 4 points of pricing increases counterbalanced by a 3-point unfavorable mix due to business and category factors. Comparable gross and operating margins improved approximately 50 basis points each, despite currency headwinds.
Fourth quarter comparable EPS rose 6% year-over-year to 58 cents, overcoming a 5% currency headwind and a higher effective tax rate. Free cash flow excluding the FairLife contingent consideration payment increased by approximately $600 million to $11.4 billion. The company's balance sheet remained robust with a net debt leverage ratio of 1.6 times EBITDA, below the target range. The company maintains a disciplined approach to managing the balance sheet as it awaits a court ruling on an ongoing IRS dispute.
Looking ahead, the company targets 4-5% organic revenue growth in 2026 and 5-6% comparable currency-neutral earnings per share growth excluding acquisitions and divestitures. Investment priorities include supporting brands for balanced top-line growth, focusing on volume as a key metric. Commodity price fluctuations and evolving trade dynamics are expected to have manageable cost impacts. Divestitures, including the pending sale of Coca-Cola Beverages Africa and the recent sale of Chi in Nigeria, will create headwinds to net revenues and EPS, weighted towards the second half of the year.
Currency strategies anticipate a 1-point tailwind to net revenues and a 3-point advantage to earnings per share based on current hedged positions. The effective tax rate is projected at 20.9%. Free cash flow is forecasted at approximately $12.2 billion, supported by cash from operations and capital investments focusing both on company-owned bottlers and growth-oriented projects. The dividend payout ratio remained consistent with the long-term target, and the company intends to continue share repurchases primarily to offset dilution from employee stock option exercises.
Management acknowledged calendar shifts influencing the timing of concentrate shipments and lose equity income due to divested consolidated interests. They highlighted an anticipatory stance for further investments and strategic initiatives to ensure continued performance and value creation.
The earnings call included multiple analyst questions covering topics such as price-mix normalization, volume growth prospects, market-specific challenges across geographies, margin sustainability and expansion in North America, digital platform investments, currency risk management, capital allocation strategies, and innovation focus areas.
The leadership transition from James Quincey to Enrique Braun was emphasized as seamless, with Roger Halpern participating as the Vice President and Head of Investor Relations. Quincey will assume the role of Executive Chairman, providing support and facilitating the transition while Braun will lead the company forward.