PepsiCo raises outlook for the year after strong Q2

PepsiCo, Inc. revised its fiscal-year outlook for organic revenue in the first quarter of the fiscal year, increasing growth guidance to 8% from a previous 6% due to consumers' response to price increases thus far.

In its Q2 results report, the business revised its outlook once more.

In spite of price increases, customers continued to consume more of its products in the most recent quarter, which led PepsiCo to enhance its revenue projection for the year.

In premarket trading, the company's shares increased by less than 1%.

According to a Refinitiv survey, the following distinction exists between what the firm reported and what Wall Street was anticipating:

·        $1.86 adjusted earnings per share vs $1.74 anticipated

·        $20.23 billion revenue versus the anticipated $19.51 billion

Pepsi reported net income for the second quarter of $1.43 billion, or $1.03 per share, compared to $2.36 billion, or $1.70 per share, in the same period last year.

The company's profits were affected by increasing prices, but the Russia-Ukraine conflict had a bigger impact. It revealed a $1.17 billion charge for the conflict-related quarter. Pepsi announced that it was halting sales in Russia, with the exception of specific necessities like baby formula, following the Russia-Ukraine last quarter. Currently, the business is attempting to phase out or reposition a few of its Russian dairy and juice brands.

When items were excluded, the company's earnings per share of $1.86 above the $1.74 per share estimate as provided by Refinitiv survey.

In excess of forecasts of $19.51 billion, net sales increased by 5.2 percent to $20.23 billion. In the third quarter, organic revenue, which excludes the effects of acquisitions and divestitures, increased 13%.

Pepsi is now projecting organic sales growth of 10% for the fiscal year 2022, up from its previous prediction of 8%. The food giant increased its revenue outlook without revising its prediction for its earnings for the second straight quarter. Pepsi is still predicting an 8% increase in core earnings per share in constant currency.

“Given our year-to-date performance, we now expect our full-year organic revenue to increase 10 percent (previously 8 percent) and we continue to expect core constant currency earnings per share to increase 8 percent,” said Chairman and CEO Ramon Laguarta.

Laguarta said that the company was happy with the results of its Q2 2022 as its commercial growth persisted despite persistent macroeconomic and geopolitical uncertainties and increased rates of inflation across markets.

He went on to say that the company's performance is a reflection of its highly committed staff, the robustness and resiliency of its categories, the company's dynamic supply chain and "go-to-market" processes, and its effective market execution. Additionally, the company's performance provides assurance that its investments in winning with pep+, which aims to make the organization even faster, stronger, and better, are paying off.

Since it is unable to predict certain factors included within reported GAAP results, such as "the impact of foreign exchange translation and commodity mark-to-market" net impacts, the Company provides guidance on a non-GAAP basis.

According to PepsiCo's updated forecast for 2022, the company still anticipates:

·        An increase in core constant currency EPS of 8%;

·        A core annual effective tax rate of 20%; and

·        Total cash returns to shareholders of about $7.7 billion, made up of dividends of $6.2 billion and share repurchases of $1.5 billion.