PepsiCo’s sales top 4th-quarter forecast

Higher prices lift food, beverage giant

PepsiCo reported betterthan-expected sales in the fourth quarter after increasing prices for its drinks and snacks.

Revenue rose more than 10% to $28 billion. That was better than the $26.8 billion Wall Street had forecast, according to analysts polled by FactSet.

PepsiCo raised prices 16% in the October-December period — and 14% overall in 2022 — as it battled doubledigit percentage cost increases for ingredients like cooking oil, potatoes and seasonings. The price increases boosted results; Frito-Lay snacks and Quaker products booked double-digit revenue gains in North America even though sales volumes were down 1% and 3%, respectively.

In Europe, PepsiCo said its costs for packaging materials, cooking oil and other commodities surged 141 percentage points. Revenue and sales volumes both fell in that market. Revenue and sales volumes rose elsewhere, including Asia and Latin America.

In prepared remarks, PepsiCo Chairman and CEO Ramon Laguerta said consumers have been resilient despite higher prices, and continue to gravitate toward familiar brands like Doritos and Cheetos. But he said the company is “diligently monitoring spending patterns and behavior.”

PepsiCo’s net income fell 60% to $535 million, largely due to a $1.5 billion tax impairment charge for its SodaStream brand and other assets. Without one-time items, Pepsi earned $1.67 per share in the October-December period, beating analysts’ forecast of $1.65.

The Purchase, N.Y., company expects to deliver organic revenue growth of 6% this year, a slower pace from its full-year organic growth of 14.4% in 2022.

The company said it expects full-year adjusted earnings of $7.20 per share, up 6% from 2022. That came in lower than Wall Street’s forecast of $7.27 per share, according to FactSet.

Pepsi also said it would buy back about $1 billion worth of its own shares and raised its annual dividend by 10%.

Also Thursday, Unilever — whose brands include Hellmann’s, Knorr, Ben & Jerry’s and Dove — said that it had raised prices for its products more than 13% in the fourth quarter, the eighth consecutive acceleration in prices. It also reported that its sales volumes shrank but by a lot less than prices had risen.

Executives at Unilever suggested that they could have raised prices even higher but held back.

“We were very mindful of the pressure on consumers and chose not to fully offset the extraordinary level of cost inflation through pricing,” Graeme Pitkethly, Unilever’s chief financial officer, told analysts on a call.

The company will continue to raise prices in the first half of the year, he said, and expected volumes to continue to fall, as inflation remained a “key theme” in 2023.