PepsiCo defies slowdown fears with strong earnings and expectations

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 revenue grew 9 percent in the third quarter, compared to the same period last year, 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, from 10 percent to 12 percent. This partly reflects the increased prices of the company’s products. Notably, it also raised its earnings growth forecast this year, from 8 percent to 10 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. Lagarta 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 increased 20 percent in the third quarter, compared to the same period last year, but volumes fell 2 percent over the same period, meaning the company was able to earn more from the sale. 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 announce 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, provided a positive start to earnings season, piercing some of the gloom that was reflected in the stock market’s five-day losing streak through Tuesday, erasing a rally early Tuesday. Month. PepsiCo stock is up more than 3 percent in early trading on Wednesday, and the S&P 500 is up 0.3 percent.

Other notable companies reporting earnings this week include Delta Air Lines on Thursday and JPMorgan Chase on Friday.