PepsiCo has raised its earnings forecast for the second time this year, in opposition to expectations of a slowdown due to inflation because of the “resilience” of consumer spending.But in that Quarterly financial report On Tuesday, PepsiCo left the profit forecast unchanged. This suggests that shoppers may cut as prices continue to rise at unpleasantly high rates.
The company, which manufactures Pepsi, Mountain Dew and Doritos, did not raise its profit outlook in line with earnings forecasts due to uncertainties about “consumer elasticity,” said Hugh F. Johnston, chief financial officer of the company. Said on the phone with the investor. .. In other words, if prices continue to rise, shoppers may end up buying less. The company now expects revenue to increase 10% from the previous quarter’s 8% forecast, and commercial revenue to remain at 8%, the same as before.
In particular, PepsiCo’s second-quarter revenues and profits, which exceeded analysts’ expectations, grew faster than sales volumes. This means that the company was able to charge more for each can of soda and bag of potato chips.
Can it keep it for the rest of the year? “There are still six months left,” Johnston said. “There are many uncertainties about what happens in consumer behavior.”
PepsiCo was one of the first big companies to report revenue in the second quarter of this year, and the tone PepsiCo set is cautious optimism. Analysts and investors are monitoring companies like PepsiCo for signs of personal consumption and the risk of a recession as the economy appears to be increasingly vulnerable.
PepsiCo’s stock price fell on Tuesday. Since the beginning of this year, it has easily beat the market, with the company’s share declining by just over 2% compared to the S & P 500, which has fallen by about 20% in the meantime.
According to PepsiCo’s report, consumers can still absorb the rise in prices, but that doesn’t seem to diminish. But going further, the company looks more cautious about how potential consumer cuts and rising costs of their own can cut into profitability. Market watchers will be scrutinizing future quarterly forecasts in other earnings reports in the coming weeks as they seek to get a feel for how the economy will shape for the rest of the year.
“As inflation continues to rise, we must be very agile and very accurate in our choices with consumers,” said Ramon L. Laguarta, PepsiCo’s CEO.
