PepsiCo Inc (PEP.O) upped its annual revenue and profit expectations for the second time on Thursday, citing strong demand for its snacks and beverages as well as pricing increases.
In premarket trade, shares increased around 2% after the company also reported positive second-quarter results.
Packaged food companies have hiked prices over the past two years to counter a jump in costs of everything from commodities such as sugar to transportation costs caused by supply chain snags during the pandemic and worsened by Russia’s invasion of Ukraine.
Meanwhile, U.S. consumers have been spending on sodas and snacks from PepsiCo and rival Coca-Cola (KO.N) even as rising interest rates and food prices hammered non-essential spending.
PepsiCo’s average prices jumped 15% for the quarter ended June 17, while organic volume slipped 2.5%.
Average price of 192 ounces of PepsiCo’s soda in the U.S. rose to $8.68 in 2022 from $7.57 in 2021, according to NielsenIQ’s data. It was $9.83 as of June 17 this year.
Net revenue at PepsiCo’s North America beverages unit, the company’s largest business which houses 7UP and Gatorade, rose 10% in the second quarter benefiting from price hikes.
But volumes slipped 4% in the unit, signaling consumers were becoming mindful about spending on sodas.
Organic revenue at the company’s Frito-Lay North America unit rose 14% and Quaker Foods saw a 2% increase.
The company said it expects 2023 organic revenue to rise 10%, compared with prior forecast of an 8% increase.
It estimated annual core earnings per share of $7.47, compared with earlier expectation of $7.27.
Net revenue rose to $22.32 billion from $20.23 billion in the second quarter, compared with analysts’ average estimate of $21.73 billion, according to Refinitiv data.