Global beverage and food company PepsiCo has surpassed analysts’ expectations by reporting robust earnings and revenue for the quarter, despite experiencing a decline in demand for its drinks and food products.
This marks the second consecutive quarter in which the company has raised its full-year outlook. As a result, PepsiCo’s shares have risen by more than 2% in premarket trading.
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PepsiCo’s earnings per share stood at $2.09 (adjusted), outperforming the projected $1.96 per share.
Similarly, the company’s revenue for the quarter reached $22.32bn, surpassing the estimated $21.73bn.
These positive financial results have further reinforced the company’s confidence in its performance.
Strong growth predicted
PepsiCo has revised its forecast for the full year of 2023, anticipating a 10% growth in organic revenue, up from its previous projection of 8%.
Furthermore, the company has increased its core constant currency earnings outlook, now expecting a 12% growth, compared to the previous estimate of 9%.
This optimistic outlook showcases PepsiCo’s belief in its ability to sustain its growth momentum.
While PepsiCo faced a decrease in volume due to higher prices for its snacks and beverages, the decline was not as significant as anticipated.
The company’s food divisions experienced a 3% drop in volume while its beverages division saw a 1% decline, excluding pricing and currency fluctuations.
PepsiCo CEO Ramon Laguarta explained that consumers are seeking better deals, resulting in increased shopping at dollar stores and club retailers.
Segment performance: mixed results
Quaker Foods North America witnessed a 5% reduction in volume during the second quarter while Pepsi’s North American beverage unit reported a 4.5% decline.
However, Frito-Lay North America emerged as a bright spot with 1% volume growth.
Popular brands like Doritos and Ruffles contributed to double-digit revenue growth, partly driven by the introduction of new packaging sizes and the addition of the “Flamin’ Hot” flavour across the division.
The launch of Frito-Lay Minis has helped maintain strong sales in the snacking category.
Marketing efforts and future strategies
To support its brands and maintain its market presence, PepsiCo increased its spending on advertising and marketing across its product portfolio by double digits during the quarter.
The company intends to return to its usual pricing strategy for the remainder of the year.
Despite the challenges posed by changing consumer behaviour and market dynamics, PepsiCo says it remains committed to delivering value to its customers and shareholders.
