PepsiCo profits top expectations, revenue misses slightly

11th Jul 2024 12:10

(Sharecast News) - PepsiCo has reported a significant increase in its second-quarter profits on Thursday, surpassing Wall Street expectations despite a continuous decline in consumer demand for its snacks and beverages.

The American food and drink giant said that for April to June, its net income jumped 12% to $3bn, translating to an adjusted $2.28 per share.

That exceeded analysts' predictions of $2.16 per share.

However, PepsiCo's revenue saw modest growth of less than 1%, reaching $22.5bn, slightly below the anticipated $22.59bn.

The New York-based company had been relying heavily on price hikes over the past two years to counteract rising costs for ingredients and packaging, with eight consecutive quarters of double-digit percentage price increases through to the end of 2023.

In 2024, prices were raised by 5% in the first quarter and 3% in the second.

Despite the increased prices bolstering profits, they had led to a decline in global sales volumes for the past eight quarters.

PepsiCo put the decline partially down to strategic decisions, such as smaller package sizes.

However, it also noted that lower-income customers in the US were either purchasing fewer snacks or opting for cheaper store brands.

At 0816 EDT (1316 BST), shares in PepsiCo were down 1.74% in premarket trading in New York, at $160.75.

Reporting by Josh White for Sharecast.com.