Jennifer Radman discusses PepsiCo
PepsiCo Inc. reported the fastest sales growth in at least a decade and raised its forecast, benefiting from thirsty consumers returning to restaurants, bars and stadiums and others diving into bags of chips.
Second-quarter revenue rose 13 per cent on an organic basis, which excludes acquisitions and currency changes, reaching US$19.2 billion, the company said Tuesday in a statement. Analysts expected US$17.9 billion on average, according to the estimates compiled by Bloomberg.
The results show how far PepsiCo is down the road to recovery, with North American businesses bouncing back and millions of consumers venturing out again. The pandemic upended consumption habits, with packaged food benefiting from a brief surge in demand while away-from-home eating slowed during temporary lockdowns.
“This quarter, all of a sudden people started going out,” PepsiCo Chief Financial Officer Hugh Johnston said in an interview. In food service, “we saw the business double in a relatively short period of time.”
Shares of PepsiCo rose as much as 2.3 per cent to an intraday record of US$152.95 in New York trading. They were up less than 1 per cent this year through Monday’s close, trailing the 17 per cent gain in the S&P 500 but ahead of Coca-Cola Co., which was down slightly.
PepsiCo’s earnings in the quarter grew to US$1.72 a share, excluding some items, compared with the US$1.53 average of analysts’ estimates. The company raised its forecast for full-year core per-share profit growth to 11 per cent on a constant-currency basis.
While pandemic restrictions continued to weigh on some markets, quarterly sales rose in all major geographic regions, including gains in Frito-Lay North America and PepsiCo Beverages North America. Organic revenue fell 14 per cent at Quaker Foods North America as more people eat breakfast outside the home.
Performance still hasn’t returned to pre-pandemic levels, Johnston said.
“People are getting out more, but they are not anywhere near where they were,” he said. Food service comprises 20 per cent of the beverage business, and 10 per cent of snacks.
The company said it will extend ongoing restructuring efforts through 2026 with a focus on improving manufacturing and optimizing the supply chain. The program will result in pretax charges of US$3.15 billion, up from a prior estimate of US$2.5 billion. PepsiCo had already incurred pretax charges of US$874 million through June 12.