‘Affordable luxuries’ help PepsiCo beat its profit forecast
Snacks and drinks maker hikes prices in major markets as demand remains resilient
10 October 2023 - 16:37
byAnanya Mariam Rajesh
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Cans of Pepsi are displayed in Paris, France. Picture: REUTERS/JACKY NAEGELEN
PepsiCo raised its annual profit forecast on Tuesday for a third time this year, as the company counts on the many price increases it has undertaken in its major markets and resilient demand for its snacks and beverages.
The share price of the group, which owns brands including Mirinda, and Gatorade, rose nearly 3% in premarket trading after it beat third-quarter profit estimates.
PepsiCo kicks off earnings from consumer goods companies against a backdrop of rising concern about several rounds of price hikes crimping demand, as well as countries such as France pressing packaged food makers to cut prices to rein in inflation.
Average prices leapt 11% in the third quarter to September 9, PepsiCo said, while organic volume slipped 2.5%.
Wedbush analyst Gerald Pascarelli said pricing in the quarter was probably a little stronger and volumes a little weaker, “but at the end of the day, the positive pricing is clearly driving operating leverage here”.
PepsiCo and rival Coca-Cola have benefited from their near domination of the global carbonated drinks market and from cost-conscious consumers spending on products categorised as “affordable luxuries”.
PepsiCo net revenue rose nearly 7% to $23.45bn, edging past estimates of $23.39bn. Adjusted profit of $2.25 a share also topped expectations of $2.15, according to LSEG data.
The company’s large snacks business, which sells everything from Doritos to Cheetos, helped counter falling demand in the beverages unit. The Frito-Lay North America unit reported a 7% jump in organic revenue increase while volumes fell marginally.
The company said it focused more on “selling profitable volume” as consumer preferences continue to evolve towards smaller packages.
PepsiCo expects fiscal 2023 core earnings per share of $7.54 compared with its prior forecast of $7.47, while maintaining its annual organic revenue growth at 10%.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
‘Affordable luxuries’ help PepsiCo beat its profit forecast
Snacks and drinks maker hikes prices in major markets as demand remains resilient
PepsiCo raised its annual profit forecast on Tuesday for a third time this year, as the company counts on the many price increases it has undertaken in its major markets and resilient demand for its snacks and beverages.
The share price of the group, which owns brands including Mirinda, and Gatorade, rose nearly 3% in premarket trading after it beat third-quarter profit estimates.
PepsiCo kicks off earnings from consumer goods companies against a backdrop of rising concern about several rounds of price hikes crimping demand, as well as countries such as France pressing packaged food makers to cut prices to rein in inflation.
Average prices leapt 11% in the third quarter to September 9, PepsiCo said, while organic volume slipped 2.5%.
Wedbush analyst Gerald Pascarelli said pricing in the quarter was probably a little stronger and volumes a little weaker, “but at the end of the day, the positive pricing is clearly driving operating leverage here”.
PepsiCo and rival Coca-Cola have benefited from their near domination of the global carbonated drinks market and from cost-conscious consumers spending on products categorised as “affordable luxuries”.
PepsiCo net revenue rose nearly 7% to $23.45bn, edging past estimates of $23.39bn. Adjusted profit of $2.25 a share also topped expectations of $2.15, according to LSEG data.
The company’s large snacks business, which sells everything from Doritos to Cheetos, helped counter falling demand in the beverages unit. The Frito-Lay North America unit reported a 7% jump in organic revenue increase while volumes fell marginally.
The company said it focused more on “selling profitable volume” as consumer preferences continue to evolve towards smaller packages.
PepsiCo expects fiscal 2023 core earnings per share of $7.54 compared with its prior forecast of $7.47, while maintaining its annual organic revenue growth at 10%.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Joe Biden announces first members of African diaspora council
JM Smucker snaps up Twinkies owner in $5bn deal
Italy’s food producers soften stance towards government’s plan to curb rising ...
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.