Shares of PepsiCo Inc. rallied Wednesday, after the beverage and snack giant reported third-quarter profit and revenue that rose above expectations and raised its full-year outlook, as higher prices helped offset some volume weakness.
Net income for the quarter to Sept. 3 rose to $2.70 billion, or $1.95 a share, from $2.22 billion, or $1.60 a share in the same period a year ago.
Excluding nonrecurring items, core earnings per share of $1.97 beat the FactSet EPS consensus of $1.84.
Revenue grew 8.8% to $21.97 billion, well above the FactSet consensus of $20.84 billion. Unfavorable currency translation reduced revenue growth by 3 percentage points.
That marked the 15th-straight quarter that PepsiCo beat profit expectations and the 20th-straight quarter revenue projections were exceeded, according to FactSet data.
The stock
PEP,
climbed 2.6% in premarket trading.
Among the largest segments, revenue from PepsiCo Beverages North American rose 3.6% to $6.64 billion, Frito-Lay North America jumped 19.6% to $5.56 billion, Europe increased 0.9% to $3.65 billion and Latin America grew 19.9% to $2.52 billion. Quaker Oats North America revenue was up 15.4% to $713 million.
Volume declined 1.5% in convenient foods and edged up 3.0% in beverages. On an organic basis, which excludes the impact of acquisitions, divestitures and other structural changes, overall volume fell 1% while effective net pricing increased 17%.
Cost of sales increased more than revenue growth, up 9.7% to $210.31 billion, as gross margin contracted to 53.1% from 53.5%.
Inventories increased 15.5% to $5.02 billion, after rising 21.6% in the second quarter and increasing 9.5% in the first quarter.
Looking ahead, the company raised its full-year core EPS guidance to $6.73 from approximately $6.63. The FactSet 2022 EPS consensus was $6.69.
The company affirmed its plan to return $7.7 billion to shareholders this year, including $6.2 billion through the payment of dividends and $1.5 billion through the repurchase of shares.
PepsiCo’s stock has slipped 6.4% year to date through Tuesday, while the SPDR Consumer Staples Select Sector exchange-traded fund
XLP,
has declined 12.7% and the S&P 500 index
SPX,
has dropped 24.7%.
