PepsiCo increased sales for the most recent quarter and is raising its earnings forecast, even though profits took a hit.
PepsiCo sales reached $20.2 billion for the quarter ending June 11, a 5.3% increase over the same period last year. Sales were especially good on the food side: The Frito-Lay North America unit posted a 14% increase, to $5.2 billion, and the Quaker Foods North America had a 17% increase, to $675 million. These gains offset a slight loss in North American beverage sales, to $6.1 billion.
However, operating profit for the quarter was down 34%, to $2.1 billion, dragged down by big losses in Europe and in “corporate unallocated expenses.” Management attributed the European loss to the sale of juice and other businesses, and the corporate expense to problems resulting from a cyberattack on a third-party payroll service this spring. Other drags on profitability included “an increase in inflationary pressures across our commodity, labor, transportation and supply chain costs,” according to a company statement.
Nevertheless, PepsiCo raised its guidance for the year, projecting an organic revenue increase of 10% for this fiscal year, up from 8% previously. Sales will continue to benefit from the company raising prices on its own products; it charged 10% more across the board in the past quarter compared with last year.
“Unlike things like cars and houses and durable goods like washing machines, we’re just sort of an affordable treat, even when times are tougher,” CFO Hugh Johnston told the Wall Street Journal.
