PepsiCo reports stronger sales as consumers eat out more, but warns of rising prices.
The return of restaurants and other activities away from the home was a big boon to PepsiCo, which reported a huge jump in revenue in its drinks and snacks businesses in the second quarter. But the company warned that inflationary pressures were likely to lead to higher prices.
The food and beverage giant, home to popular brands like Pepsi, Mountain Dew, Doritos and Cheetos, said its net revenue in the second quarter surged 20.5 percent to $19.2 billion from a year earlier. Organic revenue, which strips out the effects of currency swings and acquisitions, grew 12.8 percent. Its profit rose 43 percent to nearly $2.4 billion from about $1.7 billion a year earlier.
In trading on Tuesday, PepsiCo’s stock was up 2.2 percent to $152.86, a record high and a gain of about 13 percent in the past year.
“You are seeing an acceleration in our North American business, but also globally, with our beverage business growing much faster in ‘away-from-home’ as stores are opening and people are moving around,” Ramon Laguarta, the chief executive and chairman of PepsiCo, told analysts on a call Tuesday morning.
The food and beverage giant said it expected robust revenue and earnings growth for the entire year, and it raised full-year guidance for both targets. But the company also noted several challenges on the horizon, including difficult retail comparisons as people shift to consuming more outside the home, as well as pandemic restrictions around the world that continue to keep some people at home.
On top of that, executives said, higher costs for raw materials, labor and freight are likely to result in higher prices for consumers after Labor Day, when PepsiCo traditionally changes prices.
“Is there somewhat more inflationary pressures out there? There is. Are we going to be pricing to deal with it? We certainly are,” said Hugh Johnston, the chief financial officer of PepsiCo.
Consumers are still adjusting to a postpandemic environment in some parts of the world, but executives at PepsiCo said they expected several behavioral changes to remain, including the search for healthier, lower-sugar options in drinks and snacks and the ability to shop online versus going into stores.
Employees are starting to trickle into offices in the United States, but the home will remain a hub with much of the work force adapting to a hybrid model, executives said. “We see that as an opportunity for our snacks, our breakfast and our food business in general,” Mr. Laguarta said.
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