PepsiCo Inc forecast full-year profit above market expectations on Thursday after a rebound in soda sales and increased demand for the company’s snacks during the COVID-19 crisis helped drive quarterly sales higher.
The packaged food company beat revenue and profit estimates for the third quarter, sending its shares up 2% in premarket trading.
People spending more time working from home and taking online classes has led to a rise in demand for salty snacks, boosting demand for PepsiCo’s Tostitos, Cheetos, and Doritos from households across North America.
Sales of snacks under the company’s Frito-Lay North America unit, rose 7% in the quarter, while higher demand for breakfast foods led to a 6% rise at its Quaker Foods business.
“Both Frito-Lay and Quaker Foods continued to deliver robust growth as at home consumption trends have remained strong despite the measured reopening of economies and activities in certain areas, since May,” Chief Executive Officer Ramon Laguarta.
Higher demand for the company’s Starbucks branded coffee and energy drinks as well as low-calorie versions of Gatorade, Mountain Dew, and Pepsi helped boost the revenue of PepsiCo’s North America beverage business by 6%.
That helped offset a slump in sales at restaurants, theaters and stadiums, which has been hurting the unit’s revenue since the start of the pandemic.
Overall net revenue rose more than 5% to $18.09 billion in the quarter ended Sept. 5, beating analysts’ expectations of $17.23 billion, according to IBES data from Refinitiv.
It forecast full-year core earnings of $5.50 per share, above expectations of $5.36 per share.
In the reported quarter, net profit attributable to the company rose 9.1% to $2.29 billion, or $1.65 per share. Excluding items, the company earned $1.66 per share, beating market expectation of $1.49 per share.
PepsiCo on Thursday reported its quarterly sales grew by more than 5% as consumers bought more of its Tostitos and pancake mixes.
The food and beverage giant also provided an outlook for its earnings and revenue for the first time since yanking its forecast in April, when coronavirus pandemic lockdowns hit sales.
Earnings per share: $1.66, adjusted, vs. $1.49 expected
Revenue: $18.09 billion vs. $17.23 billion expected
Pepsi reported fiscal third-quarter net income of $2.29 billion, or $1.65 per share, up from $2.1 billion, or $1.49 per share, a year earlier. The company spent $147 million this quarter on costs associated with the coronavirus pandemic, like more expensive labor and buying personal protective equipment.
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