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PepsiCo (PEP) reports Q3 earnings

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PepsiCo hiked its forecast for the yr Wednesday as higher prices helped lift the snack and beverage maker’s revenue for the third quarter.

The corporate’s shares gained 4% following the report.

For the quarter ended Sept. 3, PepsiCo said revenue rose 9% from a yr ago to $21.97 billion, topping Wall Street expectations. The rise got here despite volume declines in among the company’s units, including its Frito-Lay North America division.

PepsiCo CEO Ramon Laguarta said the summer helped drive impulse purchases, which have the next price per liter.

“The buyer continues to be very healthy when it comes to our particular category,” Laguarta said through 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 with Wall Street estimates, based on Refinitiv:

  • Earnings per share: $1.97 adjusted vs. $1.84 expected.
  • Revenue: $21.97 billion vs. $20.84 billion expected.

For 2022, the corporate now projects organic revenue growth of 12%, up from 10%. It expects core constant currency earnings per share growth of 10%, up from 8%.

A lady grabs a bottle of Food plan Pepsi in Atlanta, Georgia.

Chris Rank | Bloomberg | Getty Images

In its Frito-Lay North America division, the corporate said revenue rose 20% within the quarter despite a dip in volume. Quaker Food North America’s revenue also climbed 15% despite a decline in volume. PepsiCo Beverages North America’s revenue increased 4% on barely higher volume.

In its European unit, PepsiCo saw revenue increase 1% despite lower volumes. Africa, Middle East and South Asia saw a 4% rise in revenue on lower volume in foods and better volume in drinks. Revenue for the unit encompassing Asia-Pacific and China climbed 3% on stronger volume in each food and drinks.

The corporate can also be 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 PepsiCo is maintaining a portfolio of energy drink brands since the market is very segmented.

For the period ended Sept. 3, PepsiCo’s net income was $2.7 billion, up from $2.22 billion a yr ago. Total revenue rose to $21.97 billion, up from $20.19 billion a yr ago.

PepsiCo has previously said it expected its costs to proceed rising within the second half of this yr. In response, the corporate has said it was accelerating its cost management initiatives, including using smaller sizes for its variety packs. Within the third quarter, the corporate’s gross margins remained essentially unchanged compared with a yr ago at 53%.

Coca-Cola is about to report earnings Oct. 25.

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