PepsiCo raises the prices of its drinks and snacks again as it continues to deal with high levels of inflation.
The company raised prices for its products at the start of the current quarter, Chief Financial Officer Hugh Johnston told the Financial Times on Wednesday, and was willing to raise them further as long as consumer demand remained as resilient as it has been so far.
PepsiCo reported Wednesday that prices for its product portfolio, which includes Gatorade sports drinks and Doritos chips, rose 17 percent overall from a year earlier during its third quarter. Johnston said the company was dealing with a level of inflation “a couple of points higher” than the price increases, leaving the company to absorb the difference if compensating cost cuts could not be made elsewhere in the business.
Global sales volumes were down only slightly, indicating consumer tolerance for more expensive products.
Driven by price increases, the company now expects organic revenue, which strips out the impact of recent acquisitions or divestitures, to rise 12% through 2022, versus a previous forecast of a 10% increase. The company had already raised revenue expectations in April and July.
PepsiCo now expects earnings of $6.73 per share this year, 10 cents higher than its previous forecast.
Despite improvements to its revenue and earnings outlook, PepsiCo warned that a stronger dollar would now result in an adverse currency impact on earnings of 2.5 percentage points, from 2 percentage points previously.
For the 12 weeks to September 3, PepsiCo posted revenue of nearly $22 billion, beating analysts’ expectations of $20.8 billion and up from $20.2 billion in the same period last year. Earnings of $1.95 per share beat Wall Street’s forecast of $1.84.
Shares of the New York-based group rose 4.4 percent during midday trading on Wednesday.
Additional reporting by Mark Wembridge in London