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Price Increases Lead to Big Jump in Profit at PepsiCo – Trending2days

PepsiCo, the beverage and snack maker, reported a big jump in quarterly profit on Thursday, despite signs that customers are buying fewer cans of soda and bags of chips as the company continues to raise prices aggressively.

The maker of Gatorade, Lay’s and Quaker Oats also raised its forecast for earnings for the rest of the year, pushing its stock higher.

The company Reported 10 percent growth in revenue, to $22.3 billion, and nearly doubled its profit since the same time last year, to $2.7 billion, in its second quarter, which ended June 17. PepsiCo said it expected revenue to grow 10 percent for the full year, up from its previous forecast of 8 percent.

The quarterly results exceeded analysts’ already optimistic expectations, and the gains come as consumers wrestle with higher prices while policymakers weigh their next move in their efforts to tame inflation.

Although PepsiCo earned more last quarter, the amount of products it sold went down. The prices of Pepsi products have risen by double-digit percentages for the past six quarters, and the company has reported dipping sales volumes for the past three quarters.

Pepsi’s prices overall were 15 percent higher in the second quarter, versus the same quarter last year. The increase was particularly pronounced in Pepsi’s European division, up 20 percent. Rising food prices in Europe have attracted particular scrutiny from economists and policymakerswho have said that corporate profits were contributing to stubbornly high inflation there.

“We’ve been able to raise prices and consumers stay within our brands,” Ramon Laguarta, chief executive of Pepsi, said on a call with analysts Thursday morning.

Mr. Laguarta attributed low unemployment in the United States and across the world as a reason consumers have continued to buy Pepsi products. data released last week showed the US labor market cooling but still strong.

Inflation data released Wednesday showed that consumer prices in the United States, including food, have gone up at a slower rate though are still a ways away from the Federal Reserve’s goal. Overall, food prices rose 5.7 percent in the year through June.

PepsiCo’s shares rose about 1 percent Thursday. The food and beverage giant is one of the first companies to report earnings each quarter, serving as a bellwether for how other companies may perform. Companies in the S&P 500 are expected to report a 7 percent decline in profits in the second quarter, according to estimates compiled by FactSet.

Coca-Cola and Nestlé will report earnings later this month. Several major banks will report their results on Friday.



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