PepsiCo raises 2023 profit expectations as price hikes offset falling sales volume
PepsiCo saw lower demand for its drinks and snacks in the second quarter but higher prices continued to boost its bottom line
PepsiCo saw lower demand for its drinks and snacks in the second quarter, but higher prices continued to boost its bottom line.
The Purchase, New York-based company reported better-than-expected revenue and raised its full-year earnings forecasts.
Shares rose more than 2% before the market opened on Thursday.
Snack food volumes fell 3% in the April-June period, while beverage volumes dropped 1%, but net pricing rose 15%. It was the sixth consecutive quarter of double-digit price increases from PepsiCo.
Pepsi's revenue rose 10% to $22.3 billion. That beat Wall Street's forecast of $21.7 billion, according to analysts polled by FactSet.
Revenue improved at Frito-Lay North America and the company’s North American beverages unit. PepsiCo also saw revenue growth in Latin America, Europe and Asia.
But pricing clearly took a toll. In the company's Africa, the Middle East and South Asia division, volumes dropped 6% as Pepsi hiked prices 24%. In Latin America, volume was down 3% as prices rose 16%.
Pepsi has previously blamed the high cost of packaging and commodities like cooking oil for its price increases. But it could have a harder time raising prices as inflation eases. In the U.S., inflation reached its lowest point since early 2021 in June.
Pepsi's net income nearly doubled to $2.75 billion. Last year, its profit was lower due to a $1.36 billion impairment charge.
Excluding one-time items, the company earned $2.09 per share. That easily beat the $1.95 per share that analysts forecast.
The company now anticipates full-year earnings up 12%, on a constant currency basis. Its prior outlook was for a
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