PepsiCo Inc. raised its outlook for the second time in as many quarters, saying it expects revenue to grow 10% this year as consumer demand remains resilient.
The maker of Mountain Dew, Fritos and Quaker Oats had previously increased its revenue forecast in April, nudging it up to 8% from 6%. Profit and sales in the second quarter beat estimates, the company said in a statement Tuesday.
The new guidance reflects "the strength and resilience of our categories and consumer demand trends,” according to the company. As it’s one of the first major industry players to report second-quarter data, investors are closely watching PepsiCo for insights into how shoppers are behaving as persistent inflation stretches their ability to absorb price increases.
The company reported sales of $20.2 billion in the quarter -- just above analysts’ average estimate of $19.55 billion. Profit excluding some items was $1.86 a share, above the $1.74 estimate.
Unit volume increases weren’t as strong as those for revenue, indicating that some of the quarter’s gains came from price increases. Overall, prices were 12% higher across products during the quarter, according to Hugh Johnston, PepsiCo’s chief financial officer. Frito-Lay North America’s volume was down 2%. Those results were weighed down by a temporary production glitch with the company’s hummus product, Sabra. Also, Quaker Foods North America was up 2%, and PepsiCo Beverages North America was down 1%.
"Inflation was higher than 12% over the quarter, so we did need to fix some pricing,” Johnston said in an interview. Pricing did affect volumes, he said, "but the volumes have held up well.”
The North American food and beverage business remained strong during the quarter, while demand for convenient foods helped international markets continue to perform despite geopolitical instability and the pandemic’s lingering effects.
"Our business momentum continued despite ongoing macroeconomic and geopolitical volatility and higher levels of inflation,” Chief Executive Officer Ramon Laguarta said in the company’s statement.
The stock rose 1.4% in trading before US exchanges opened.
