Coca-Cola Takes $760 Million Charge Against BodyArmor

Coca-Cola Co. had a fair first quarter, with revenues up 3% to $11.3 billion and net income up 2% to nearly $3.2 billion (although operating income was down 36%). Part of the weight on overall results was a $760 million charge related to acquired sports drink BodyArmor.

“While we are taking a charge to reflect revised projections and a higher discount rate since the acquisition date of BodyArmor, we believe in the power of our two sports brand strategy with Powerade and BodyArmor,” Chairman and CEO James Quincey told financial analysts April 30. “We’re taking actions to help create long-term value and we’re seeing signs that this strategy is working.”

Coca-Cola bought BodyArmor, the No. 2 U.S. sports drink brand, in November 2021 for $5.6 billion, in its largest-ever acquisition.

“Clearly, we haven’t progressed as fast as we would like with regard to BodyArmor,” Quincey continued. “Notwithstanding that, we do see long-term value in the dual strategy, particularly in the US, between Powerade and BodyArmor. We’re off to a good start with some of the plans.

“The zero calorie version is ahead of expectations. The Flash I.V. has got some double-digit share and the SportWater version is one of the fastest-growing premium water brands; so some product innovation that’s getting some traction,” the chairman/CEO said. “Obviously, we’ll have an opportunity with the Olympics to really continue to step that up.”

During the quarter ending March 29, Coca-Cola’s overall organic revenues grew 11% and unit case growth inched up 1%. Executives project earnings per share growth of 4-5% vs. $2.69 in 2023.

Quincey said he’s “encouraged by our ability to scale Fairlife organically.” Construction began in April on a 745,000-sq.-ft., $650 million Fairlife dairy processing facility in Webster, N.Y. It’s expected to open in the second half of 2025 and create 250 jobs.