PepsiCo Raises Profit Forecast as Demand Remains Strong
PepsiCo Raises Annual Profit Forecast for Third Time
PepsiCo Inc has once again increased its annual profit forecast, marking the third time this year. The company attributes this positive outlook to price hikes implemented across its major markets, as well as the unwavering demand for its snacks and beverages. This announcement has resulted in a nearly 3% rise in premarket trading for PepsiCo, which owns popular brands such as Mirinda and Gatorade.
Concerns Over Price Hikes Fail to Dent Demand
Amid rising concerns over multiple rounds of price hikes affecting demand, PepsiCo remains confident in its strategy. Despite countries like France pressuring packaged food makers to lower prices, the company reported an 11% jump in average prices for the third quarter. While organic volume experienced a slight decline of 2.5%, Wedbush analyst Gerald Pascarelli believes that the positive pricing is driving operating leverage.
PepsiCo and Coca-Cola Benefit from Market Dominance
PepsiCo and its rival, Coca-Cola, have benefited from their near-domination of the global carbonated drinks market. Additionally, cost-conscious consumers continue to spend on products categorized as “affordable luxuries.” PepsiCo’s net revenue rose nearly 7% to $23.45 billion, surpassing estimates, and its large snacks business has helped offset declining demand in the beverages unit.
Fiscal 2023 Outlook
PepsiCo anticipates core earnings per share of $7.54 for fiscal 2023, an increase from its previous forecast of $7.47. The company also maintains its annual organic revenue growth projection of 10%. As consumer preferences continue to shift towards smaller packages, PepsiCo has focused on selling profitable volume to adapt to evolving trends.
With resilient demand and successful price hikes, PepsiCo remains optimistic about its future profitability and growth prospects.
