Pepsi soft drinks are on display in a convenience store in San Francisco, California.
Justin Sullivan | Getty Images
PepsiCo raised its full-year forecast Tuesday after its quarterly earnings and earnings exceeded analysts’ expectations, despite higher costs and supply chain confusion.
However, the company’s North American beverages division saw moderate growth in the quarter. Pepsi shares lost less than 1% in pre-market trading.
Executives said supply chain disruptions and inflationary pressures on labor, raw materials and transportation weighed on third quarter results.
Here’s what the company said, relative to Wall Street expectations, based on an analyst survey by Refinitiv:
- Earnings per share: adjusted $ 1.79 versus expected $ 1.73
- Revenue: $ 20.19 billion versus an expected $ 19.39 billion
For the quarter ended September 4, net income declined to $ 2.22 billion, or $ 1.60 per share, from $ 2.29 billion or $ 1.65 per share a year earlier.
Without items, the food and beverage giant earned $ 1.79 per share, beating the $ 1.73 per share that Refinitiv surveyed analysts had expected.
Net sales rose 11.6% to $ 20.19 billion, beating expectations of $ 19.39 billion. The company’s organic sales, excluding the impact of acquisitions and divestments, rose 9% for the quarter.
Pepsi’s North American beverages business posted organic sales growth of 7% for the quarter. While the unit’s organic sales increased 10% on a two-year basis, growth has slowed since recovering from 21% in the previous quarter. The company said it had double-digit net sales growth for its hospitality business, which includes sales to restaurants, stadiums and universities.
Frito-Lay saw organic sales increase 5% as consumers retained many of their pandemic snacking habits. Pepsi said it gained market share in the salty and savory snack categories during the quarter.
Quaker Foods North America, Pepsi’s most challenged business unit, saw organic sales growth of 1%. It was the only segment to see a decline in volume that excludes the effects of price changes and the largest decline in operating income.
For the full year, Pepsi expects organic sales to grow 8% from its previous forecast of 6%. The company reiterated its guidance for currency-neutral core earnings per share of 11% growth. Analysts forecast earnings growth of 13% and sales growth of 9.5% for the full year.