A customer has a can of Pepsi drink in a mall on March 9, 2022 in Shaoxing, Zhejiang Province of China.
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PepsiCo on Tuesday boosted its revenue outlook for the year as consumers snacked on more Doritos chips and drank more Gatorade in its final quarter, although prices rose.
The company’s shares rose less than 1% in pre-market trading.
This is what the company reported compared to what Wall Street expected, according to a survey by Refinitiv analysts:
- Earnings per share: $ 1.86 adjusted compared to the $ 1.74 expected
- Revenue: $ 20.23 billion compared to projected $ 19.51 billion
Pepsi reported second-quarter net income attributable to the company of $ 1.34 billion, or $ 1.03 per share, below $ 2.36 billion, or $ 1.70 per share, a year earlier.
The company’s margins shrank as it faced higher transportation and freight costs during the quarter. CEO Ramon Laguarta said in prepared comments that Pepsi is accelerating its cost management initiatives and using “blending and assortment solutions,” as smaller sizes for its variety packages.
While higher costs weighed on its profits, the food and beverage giant saw greater success in the war between Russia and Ukraine. He reported a $ 1.17 billion charge for the conflict-related quarter. Following the Kremlin invasion of the neighboring country last quarter, Pepsi said it was stopping sales in Russia, except for some essential items, such as baby formula. The company is now trying to discontinue or reposition some of its Russian juice and dairy brands.
Excluding items, the company earned $ 1.86 per share. Net sales increased 5.2% to $ 20.23 billion. Organic revenue, which eliminates the impact of acquisitions and divestments, rose 13% during the quarter.
Frito-Lay North America reported that organic revenues grew 14% as Cheetos and Doritos sales grew, but volume, which excludes the impact of prices or currency fluctuations, decreased by 2 %. Laguarta said the division gained market share during the quarter.
The company’s U.S. beverage unit experienced organic revenue growth of 9%, but its volume fell 1%. Gatorade, Aquafina and Lifewtr experienced double-digit growth during the quarter.
Quaker Foods North America, typically the last in Pepsi’s portfolio, was the only national segment to record volume growth during the quarter. Their organic income increased by 18%, helped by the double-digit growth of rice and pasta, oatmeal and biscuits. Its volume increased by 2%.
For 2022, Pepsi now expects organic revenue growth of 10%, more than its previous forecast of 8%. This is the second consecutive quarter that the company has increased its revenue forecast without updating its earnings expectations. Pepsi still expects 8% growth in earnings per share in constant currency.
Laguarta said the company expects U.S. business to be resilient and most of its international markets to be strong, despite macroeconomic and geopolitical volatility.
Read the full earnings report here.