Atlanta
Coke keeps its fizz: Coca-Cola reported better than expected revenue in the fourth quarter as higher prices for its products helped the drinks giant overcome a lower volume of sales in North America, says Amelia Lucas for CNBC. Net sales by value rose 7% to $10.8bn, beating estimates of $10.7bn, although net income fell slightly to almost $2bn, or 46 cents per share. Demand for Coca-Cola’s bottled water, sports drinks, coffee and tea all fell as household budgets continue to be squeezed. The decline was not as severe in rival PepsiCo’s beverage business, which saw volume sales fall 6% in the fourth quarter from a year earlier. More globally, the Israel-Hamas war has caused supply-chain issues and depressed demand.
For 2024, Coca-Cola expects 6% to 7% organic sales growth (which strips out acquisitions), higher than Pepsi, which forecasts organic growth of at least 4%. Coca-Cola’s steady performance underscores its appeal to investors, says Aaron Back in The Wall Street Journal. Its shares are not a bargain at 21.1 times forward earnings, but they are below the company’s ten-year average of 22.3 times. With investors needing some hedges in their portfolios in case things go awry should US inflation lead to interest rates staying higher for longer, consumer staple stocks fit the bill. “Investors should stick with ones that have proven their resilience.”
San Francisco
Uber turns a corner: After 15 years of trying, ride-hailing app Uber is finally profitable, says Camilla Hodgson in the Financial Times. The US company made an operating profit of $1.1bn in 2023 compared with a $1.8bn loss the previous year, while its fourth-quarter operating income of $652m comfortably beat forecasts. This was driven by strong demand for ride bookings and food deliveries, as well as cost reductions.
Uber had consistently made steep losses, and when it floated in New York five years ago, it failed to meet its expected $120bn valuation. Uber also burned through cash to gain market share and fend off increasing competition from Lyft, Deliveroo and DoorDash. Last year was “an inflection point for Uber, proving that we can continue to generate strong profitable growth at scale”, said CEO Dara Khosrowshahi (pictured). The company reported $3.4bn of free cash flow for 2023, up from $390m in 2022, and suggested that it could return capital to shareholders. However, Uber should steer clear of buying back shares with its newfound cash as its margin is only 9%, says Lex in the same paper. Social media firm
