PepsiCo(PEP.O) announced on Thursday that it expects its core earnings decline for the year to be smaller than anticipated, driven by increased demand for energy drinks and healthier soda brands in the U.S. and favorable exchange rate changes.
Shares gained 1.2% in pre-market trading after the company reported a surprise increase in second-quarter earnings. However, the stock is down about 11% year-to-date.
PepsiCo said it expects its core earnings per share for 2023 to fall 1.5%, down from a previous estimate of a 3% decline. CEO Ramon Laguarta said, “Our baseline USD earnings per share estimate has improved thanks to the weakening of the US dollar and the easing of currency barriers,” adding that improvements were seen in key categories and channels in the North American business. Like rival Coca-Cola, PepsiCo is responding to consumers’ shift towards healthier snacks by offering options such as its newly acquired prebiotic soda brand Poppi and new flavors in popular brands like Lay’s and Doritos. While price increases over the past few years have kept the company’s profit margins low, PepsiCo is also trying to appeal to cost-conscious consumers by offering more affordable products. –>
The company’s second-quarter revenue rose 1% to $22.73 billion, instead of the average analyst estimate of a 0.99% decrease.
