By Ananya Mariam Rajesh
(Reuters) -PepsiCo Inc said on Tuesday it planned “modest” price hikes next year as demand held up despite multiple increases that prompted the snacks and beverages giant to raise its 2023 profit forecast for a third straight time.
Shares of the company, which owns brands including Mirinda, and Gatorade, were up nearly 2% in premarket trading after third-quarter profit beat estimates.
PepsiCo kicks off quarterly earnings from consumer goods firms against the backdrop of rising concerns that multiple price hikes could crimp demand, as well as countries like France pushing for price cuts to help rein in inflation.
“As we get into next year there will be some modest level of price increases coming,” Chief Financial Officer Hugh Johnston told Reuters in an interview.
Average prices jumped 11% in the quarter ended Sept. 9, while organic volume slipped 2.5%.
PepsiCo and rival Coca-Cola have benefited from their near-domination of the global carbonated drinks market, as well as cost-conscious consumers spending on products categorized as “affordable luxuries”.
Wedbush analyst Gerald Pascarelli said pricing in the quarter was probably a little stronger and volumes were probably a little weaker.
Higher pricing probably led to volumes being flattish a little bit, Johnston said.
Meanwhile, Johnston said the company was “not seeing any impact” yet from the popularity of weight-loss drugs that could alter consumption patterns.
The surge in demand for such drugs, which include Wegovy and Ozempic, has triggered investor worries about a likely hit to sales for major packaged food companies.
PepsiCo’s net revenue rose nearly 7% to $23.45 billion, edging past estimates of $23.39 billion, the smallest beat in 17 quarters. Adjusted profit of $2.25 per share also topped expectations of $2.15, according to LSEG data.
The Frito-Lay North America unit reported a 7% jump in organic revenue while volumes fell marginally.
PepsiCo forecast fiscal 2023 core earnings per share of $7.54, up from $7.47 earlier, while maintaining its annual organic revenue growth forecast at 10%.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)
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