Pepsi products at a convenience store in Crockett, California, US, on Friday, June 16, 2023.
David Paul Morris | Bloomberg | Getty Images
PepsiCo on Thursday reported quarterly earnings and revenue that topped analysts’ expectations, despite falling demand for its drinks and food.
The beverage giant also raised its full-year outlook for the second consecutive quarter.
Shares of the company rose more than 2% in premarket trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.09 adjusted vs. $1.96 expected
- Revenue: $22.32 billion vs. $21.73 billion expected
For 2023, Pepsi now expects 10% organic revenue growth, up from its prior forecast of 8%. The company also hiked its core constant currency earnings outlook to 12% growth from its previous expectation of 9%.
Pepsi reported second-quarter net income attributable to the company 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 revenue, which strips out the impact of acquisitions and divestitures, rose 13% in the quarter.
But the company’s volume fell as higher prices for its snacks and drinks hurt demand. Volume, which excludes pricing and currency fluctuations, dropped 3% for Pepsi’s food divisions and 1% for its beverages.
PepsiCo CEO Ramon Laguarta said that consumers are looking for better deals and shopping more from dollar stores and club retailers.
“Every segment of the consumer is making adjustments,” he told analysts on the company’s conference call.
But executives also said that the company’s volume hasn’t fallen as much as expected, likely thanks to low global unemployment. Pepsi is planning to return to its usual pricing strategy the rest of the year.
Quaker Foods North America’s volume shrank 5% in the second quarter, and Pepsi’s North American beverage unit reported volume fell 4.5% during the period.
However, Frito-Lay North America was one bright spot, reporting 1% volume growth.
The company said brands like Doritos and Ruffles saw double-digit revenue growth. Pepsi has been introducing new packaging sizing, adding its “Flamin’ Hot” flavor to brands across the division and launching Frito-Lay Minis to keep its snacking sales high.
Pepsi’s spending on advertising and marketing across its portfolio rose by double digits during the quarter.