PepsiCo says it’s strong Quarterly earnings On Wednesday, it raised its forecast for sales and profit this year, in a sign that shoppers have continued to spend on soft drinks and snacks despite the rapid rise in prices that are straining household budgets.
The company, which owns Doritos, Gatorade and other brands besides its namesake soft drink, said third-quarter revenue grew 9 percent from a year earlier and profits expanded more than 20 percent. Both results were higher than analysts had expected, amid concerns that high inflation, especially for food and other basic commodities, could significantly reduce consumer purchases.
“Our global business momentum remains strong,” PepsiCo CEO Ramon Laguarta said in a statement.
The company raised its full-year forecast for revenue growth for the third time this year to 12 percent from 10 percent. This partly reflects the increase in the prices of its products. Notably, the company also raised its profit growth forecast this year to 10 percent from 8 percent, indicating that it was able to balance its increasing costs with the prices it charges consumers without affecting its bottom line.
“Our brands are stretching to higher price points, and consumers are following us,” Mr. Lagorta said on a call with analysts.
But as in recent quarters, PepsiCo’s revenue growth has outpaced sales volumes, as measured by the number of soda cans and bags of chips consumers were willing to buy. At Frito-Lay’s North American unit, for example, revenue in the third quarter increased 20 percent from a year earlier while volumes fell 2 percent, meaning the company was able to earn more selling less.
PepsiCo’s profit would have been greater if it weren’t for The strength of the US dollarwho shaved 3 percent of earnings growth in the third quarter, as the company’s extensive overseas sales were less valued when converted into dollars.
PepsiCo is one of the first big companies to report its earnings every quarter, so investors are paying special attention to its finances as they look for clues about how other companies are doing. The conflicting signals made it difficult to predict Where are corporate profits headed? This quarter, as Increasingly dire predictions About the impact of higher interest rates on the global economy contradicts some signs of it moderate inflation and Flexible job market.
PepsiCo’s better-than-expected results, and optimism about the future, delivered a positive start to earnings season, breaking through some of the gloom that was reflected in stock market losses for five straight days through Tuesday, erasing a rebound early in the month. PepsiCo shares rose more than 4 percent in trading on Wednesday, and the Standard & Poor’s index fell 0.3 percent.
Other notable companies reporting earnings this week include Delta Air Lines on Thursday and JPMorgan Chase on Friday.