Pepsi products at a convenience store in Crockett, California, USA, on Friday, June 16, 2023.
David Paul Morris | Bloomberg | Getty Images
PepsiCo on Thursday reported quarterly earnings and earnings that beat analyst expectations despite falling demand for its drinks and food.
The beverage giant also raised its full-year outlook for the second straight quarter.
Shares of the company rose more than 2% in premarket trading.
Here’s what the company reported compared to what Wall Street expected, based on an analyst survey by Refinitiv:
- Earnings per share: $2.09 adjusted versus $1.96 expected
- Revenue: $22.32 billion versus $21.73 billion expected
For 2023, Pepsi now expects organic revenue growth of 10%, up from its previous forecast of 8%. The company also raised its core profit forecast in constant exchange rates to 12% growth from its previous expectation of 9%.
Pepsi reported second-quarter net income of $2.75 billion, or $1.99 per share, up from $1.43 billion, or $1.03 per share, a year earlier.
Excluding items, the beverage giant earned $2.09 per share.
Net sales rose 10.4% to $22.32 billion. The company’s organic sales, excluding the impact of acquisitions and divestitures, were up 13% in the quarter.
But the company’s volume fell as higher prices for its snacks and beverages depressed demand. Volume, excluding price and currency movements, was down 3% for Pepsi’s food divisions and 1% for beverages.
PepsiCo CEO Ramon Laguarta said consumers are looking for better deals and more shopping at dollar stores and club retailers.
“Every consumer segment is making adjustments,” he told analysts on the company’s conference call.
But executives also said the company’s volume has not fallen as much as expected, likely thanks to low global unemployment. Pepsi plans to return to its usual pricing strategy for the rest of the year.
Quaker Foods North America volume contracted 5% in the second quarter, and Pepsi’s North American beverage unit reported volume declines of 4.5% over the period.
Frito-Lay North America was a bright spot, however, with volume growth of 1%.
The company said brands like Doritos and Ruffles saw double-digit sales growth. Pepsi introduces new pack sizes, adds its “Flamin’ Hot” flavor to brands across the division and launches Frito-Lay Minis to keep snack sales up.
Pepsi’s spending on advertising and marketing across the portfolio grew by double digits during the quarter.