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While contending with currency headwinds and sluggish conditions across its developed markets, Coca-Cola (KO) edged past 1Q25 EPS and revenue expectations, displaying the company's resiliency and solid execution. Relative to rival PepsiCo (PEP), which fell just short of Q1 EPS estimates last Thursday, KO delivered stronger results as its pricing power and cost discipline underpinned its outperformance. KO also reaffirmed its FY25 EPS growth and organic revenue growth guidance of 2-3% and 5-6%, respectively, highlighting management's confidence in sustaining growth amid intensifying macroeconomic pressures.

• Similar to the past several quarters, KO relied on pricing strength to offset inflationary pressures and currency headwinds -- although, pricing momentum slowed in Q1. Following increases of 7-8% in 3Q24 and 9% in 4Q24, price/mix moderated in Q1, up 5%, as the impact from markets experiencing intense inflation contributed less this quarter. For instance, in the EMEA region, price/mix was higher by 3% in Q1 compared to 11% in Q4. 
• In terms of volume, KO continues to generate stable, albeit modest, growth. Global unit case volume grew 2% yr/yr, down a tick from Q4's growth of 3%, supported by strong performances in emerging markets like India, China, and Brazil. In more developed markets, such as North America, KO is experiencing subdued demand as consumers rein in discretionary spending and turn to more value conscious shopping behaviors. Unit case value grew by just 1% in North America in Q1.
• Due to the deceleration in price/mix and volume growth, organic revenue growth also slowed to 6% from 14% last quarter, signaling some moderation in top-line momentum. Again, relative to PEP, which generated organic revenue growth of 1.2% in Q1, KO's growth still looks solid.
• Non-GAAP operating margin expanded again, improving by 140 bps yr/yr to 33.8%, bolstered by organic revenue growth, cost management, and strategic marketing spend timing. KO does not explicitly state what its operating expenses totaled in Q1, but the substantial 71% increase in operating income suggests that KO kept a tight lid on costs.

Despite facing headwinds such as currency fluctuations and softening consumer spending patterns in developed markets, KO demonstrated its resiliency by generating robust operating income growth, showcasing its pricing power and solid cost management efforts. The strong performance underscores KO's ability to navigate difficult business climates and deliver solid results.