PepsiCo raises annual forecasts on buoyant demand, price hikes

PEPSICO on Tuesday (Apr 25) raised its annual sales and profit forecasts after beating first-quarter revenue estimates on the back of steady demand for its sodas and snacks, as well as price hikes undertaken to offset rising costs.

Major consumer goods companies hiked prices to battle skyrocketing costs of everything from aluminum cans to labour and shipping triggered by supply-chain disruptions during the pandemic and aggravated by the Russia-Ukraine conflict.

PepsiCo’s average prices jumped 16 per cent for the first quarter, while organic volume slipped 2 per cent.

Average price of 192 ounces of PepsiCo’s soda in the US rose to US$8.67 in 2022 from US$7.57 in 2021, according to NielsenIQ’s data. It was US$9.67 so far in 2023.

In February, however, the Frito-Lay maker said it would not raise prices of its products further in contrast to rival Coca-Cola.

Sales at North America beverage unit, PepsiCo’s largest business, rose 8 per cent in the March quarter.

Organic revenue at the company’s Frito-Lay North America unit rose 16 per cent in the first quarter, compared with a 14 per cent increase a year earlier.

CEO Ramon Laguarta said in a statement the company’s “categories and geographies remained resilient during the first quarter”.

The company’s net revenue rose 10 per cent to US$17.85 billion in the first quarter, compared with analysts’ estimates of US$17.22 billion, according to Refinitiv data.

SEE ALSO

Coca-Cola rides on higher prices, steady demand to upbeat quarter

PepsiCo said it expects 2023 organic revenue to rise 8 per cent, compared with its prior forecast of a 6 per cent increase.

The company now expects annual core earnings per share of US$7.27, compared with US$7.20 earlier.

Coca-Cola maintained its annual forecasts after beating estimates for first-quarter revenue and profit on Monday.

PepsiCo’s shares rose 1 per cent in premarket trading. REUTERS