PepsiCo is again raising prices on its drinks and snacks as it continues to deal with high inflation levels.
The company increased prices on its products at the start of the current quarter, chief financial officer Hugh Johnston told the Financial Times on Wednesday, and was open to lifting them further as long consumer demand remained as resilient as it has been thus far.
PepsiCo reported Wednesday that prices for its portfolio of products, which includes Gatorade sports drinks and Doritos chips, were up 17 per cent overall from the previous year during its third quarter. Johnston said the company was contending with an inflation level running “a couple of points higher” than the price increases, leaving the company to absorb the difference if offsetting cost cuts could not be made elsewhere in the business.
Global sales volumes were down only slightly, indicating consumer tolerance for the pricier products.
Driven by the price increases, the company now expects organic revenue, which strips out the impact of recent acquisitions or divestitures, to rise 12 per cent during 2022, up from a previous forecast of a 10 per cent increase. The company had already raised revenue expectations in April and July.
PepsiCo now expects earnings of $6.73 a share this year, 10 cents higher than its previous forecast.
Despite the upgrades to its revenue and earnings outlook, PepsiCo warned a stronger dollar would now result in an adverse foreign exchange impact on earnings of 2.5 percentage points, from 2 percentage points previously.
For the 12 weeks to September 3, PepsiCo posted revenue of almost $22bn, overshooting analysts’ expectations of $20.8bn and up from $20.2bn in the same period last year. Earnings of $1.95 a share exceeded Wall Street forecasts of $1.84.
Shares in the New York-based group were up 4.4 per cent during midday trading on Wednesday.
Additional reporting by Mark Wembridge in London
