PepsiCo hiked its forecast for the year Wednesday as higher prices helped lift the snack and beverage maker’s revenue for the third quarter.
The company’s shares were up 4% in afternoon trading.
For the quarter ended Sept. 3, PepsiCo said revenue rose 9% from a year ago to $21.97 billion, topping Wall Street expectations. The increase came despite volume declines in some of the company’s units, including its Frito-Lay North America division.
PepsiCo CEO Ramon Laguarta said the summer helped drive impulse purchases, which have a higher price per liter.
“The consumer is still very healthy in terms of our particular category,” Laguarta said during the company’s earnings call Wednesday. “Our brands are being stretched to higher price points and the consumers are following us.”
Here’s how the owner of Mountain Dew, Gatorade and Lay’s performed compared to Wall Street estimates, according to Refinitiv:
- Earnings per share: $1.97 adjusted vs. $1.84 expected.
- Revenue: $21.97 billion vs. $20.84 billion expected.
For 2022, the company now expects organic revenue growth of 12%, up from 10%. It expects core constant currency earnings per share growth of 10%, up from 8%.
A woman grabs a bottle of Diet Pepsi in Atlanta, Georgia.
Chris Rank | Bloomberg | Getty Images
In its Frito-Lay North America division, the company said revenue rose 20% in the quarter despite a dip in volume. Quaker Food North America’s revenue also rose 15% despite a decline in volume. PepsiCo Beverages North America’s revenue increased 4% on slightly higher volume.
In its European unit, PepsiCo saw revenue increase 1% despite lower volumes. Africa, Middle East and South Asia saw a 4% increase in revenue on lower volume in foods and higher volume in drinks. Revenue for the unit encompassing Asia Pacific and China rose 3% on stronger volume in both food and drinks.
The company is also leaning into energy drinks, taking a $550 million stake in Celsius Holdings in August and launching Gatorade FastTwitch a month later. Chief Financial Officer Hugh Johnston said the company is maintaining a portfolio of energy drink brands because the market is highly segmented.
For the period ended Sept. 3, PepsiCo’s net income was $2.7 billion, up from $2.22 billion a year ago. Total revenue rose to $21.97 billion, up from $20.19 billion a year ago.
PepsiCo has previously said it expected its costs to continue rising in the second half of this year. In response, the company has said it was accelerating its cost management initiatives, including using smaller sizes for its variety packs. In the third quarter, the company’s gross margins remained essentially unchanged compared to a year ago at 53%.
Coca-Cola is set to report earnings Oct. 25.