© Reuters. FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena, California, U.S., July 11, 2017. REUTERS/Mario Anzuoni/File Photo/
(Reuters) -PepsiCo Inc raised its full-year revenue forecast on Tuesday as consumers bought more sodas and snacks even in the face of rising prices.
The company’s shares rose about 1.3% to $172.70 in premarket trading.
Packaged food makers have so far felt little impact of decades-high inflation on consumer demand, especially in the United States, as people prioritize spending on eating at home rather than at restaurants.
However, signs are starting to emerge that a ceiling on price increases has been reached with some grocery stores now pushing back on price hikes from food companies.
Earlier this year, PepsiCo (NASDAQ:)’s snack brands briefly disappeared from shelves at Canadian grocer Loblaw Cos Ltd after the two companies sparred over price increases.
However, that had little effect on PepsiCo’s overall net revenue, which rose 5.2% to $20.23 billion in the second quarter ended June 11, beating analysts’ estimates of $19.51 billion, according to IBES data from Refinitiv.
Organic revenue at the company’s Frito-Lay North America unit rose 14% in the reported quarter, with its Doritos, Cheetos and Ruffles snack brands each delivering double-digit net revenue growth.
Organic revenue at PepsiCo’s North America beverage business rose 9%.
The company reported a near 40% fall in attributable net income to $1.43 billion, in the second quarter, as it recorded a $1.4 billion charge primarily related to the write down of some assets due to the Russia-Ukraine conflict.
“The decline in core operating profit also reflects an increase in inflationary pressures across our commodity, labor, transportation and supply chain costs,” PepsiCo executives said.
On an adjusted basis, the company earned $1.86 per share, compared with estimates of $1.74 per share.
PepsiCo said it expects fiscal 2022 organic revenue to rise 10%, compared to a previous forecast of an 8% increase.