Pepsi soda is displayed on shelves at the Walmart Supercenter on December 06, 2022 in Austin, Texas. PepsiCo, the maker of Pepsi soda, plans to cut hundreds of corporate jobs at its North American division, according to a news report from The Wall Street Journal.
Brandon Bell | Getty Images
PepsiCo reported quarterly earnings and revenue on Thursday that exceeded analysts’ expectations, fueled by higher prices for its snacks and drinks.
But the company saw volumes in its food business fall 2% worldwide as price hikes hurt consumer demand. Nevertheless, Pepsi plans to intensify its “revenue management”, which generally means raising prices based on estimates that inflationary pressures will remain in 2023.
Shares of the company rose more than 1%.
Here’s what the company reported compared to what Wall Street expected, based on a poll of analysts by Refinitiv:
- Earnings per share: $1.67 adjusted versus $1.65 expected
- Revenue: $28 billion vs. $26.84 billion expected
The food and beverage giant posted fourth-quarter net income of $518 million, or 37 cents per share, up from $1.32 billion, or 95 cents per share, a year ago. Pepsi said it wrote down some of its brands, including SodaStream and Pioneer Foods, because of high interest rates.
Excluding those impairment charges, gains from selling its juice business, write-downs of its Russian assets and other items, Pepsi earned $1.67 per share.
Net sales increased 10.9% to $28 billion. The company’s organic revenue, which strips out the impact of acquisitions and divestitures, climbed 14.6% in the quarter.
But demand for Pepsi products actually declined during the quarter. Volume, which excludes pricing and currency fluctuations, fell 7% in Quaker Foods North America and 2% in its North American Beverage division.
One bright spot was Pepsi Zero Sugar, which saw a 26% increase in volumes. And the authorities have high hopes for the drink. The company announced in mid-January that it had revamped the formula to more closely match Western Europe’s version, nearly a year after rival Coca-Cola updated Coke Zero’s recipe. As part of the relaunch, Pepsi is running two Super Bowl ads on Sunday highlighting Pepsi Zero Sugar.
Frito-Lay North America reported flat volume for the quarter, despite double-digit revenue growth for Doritos, Cheetos, Smartfood and several of its other brands.
Looking to 2023, Pepsi is forecasting 6% growth in organic revenue and 8% growth in its core constant currency earnings per share. Wall Street is forecasting net sales growth of 3.5% and earnings per share growth of 7.3%.
“Would we expect volumes to be down? Maybe they’ll be down a little bit,” CFO Hugh Johnson told analysts on a conference call.
He said there could be a “mild” recession in the US and some developed markets in the second half of 2023.
Read PepsiCo’s full earnings report here.
Source: www.bing.com
