PepsiCo raises full-year forecasts due to strong demand and rising prices



PepsiCo raises full-year forecasts due to strong demand and rising prices

PepsiCo Inc raised its full-year sales and earnings forecasts on Tuesday after outperforming its first-quarter results amid strong demand for sodas and snacks and a price hike the company has taken to offset rising costs.

Major consumer goods companies have raised prices to cope with skyrocketing costs for everything from aluminum cans to labor and delivery services caused by supply chain disruptions during the coronavirus pandemic and exacerbated by the conflict between Russia and Ukraine.

“We don’t expect commodity prices to come down for us, just inflation to ease slightly over the course of the year,” PepsiCo’s chief financial officer told Reuters. Hugh Johnston (Hugh Johnston).

Average PepsiCo product prices jumped 16% in the first quarter, while organic volume fell 2%.

The company’s shares rose more than 1% in premarket trading as the results showed consumer resilience and followed those previously announced by Coca-Cola.

According to NielsenIQ data, the average price of 192 ounces (approximately 5.7 liters) of PepsiCo soda in the US rose to $8.67 in 2022 from $7.57 in 2021. In 2023, this amounted to $9.67.

In February, however, maker Frito-Lay said it would not raise prices for its products, unlike rival Coca-Cola.

The elevated outlook for this stage of the year suggests “very deep confidence in what’s going on in the snacks business as well as improvements in the beverage industry,” said Markus Hansen (Markus Hansen), portfolio manager at Vontobel Quality Growth, adding that PepsiCo has historically been very conservative.

Sales of the North American beverage division, PepsiCo’s largest business, which includes 7UP and Gatorade, rose 8% in the first quarter.

PepsiCo said it expects organic revenue to grow 8% in 2023, compared to its previous forecast of a 6% increase.

The company now expects annual core earnings per share of $7.27, up from $7.20 previously.

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