The manufacturer of Gatorade and Lay’s, whose most recent quarterly profit nearly doubled, has been increasing prices by double-digit percentages for more than a year.
PepsiCo reported a significant increase in quarterly profit on Thursday, despite indications that customers are purchasing fewer soda cans and packages of chips as the company continues to vigorously raise prices.
Pepsi, which produces Gatorade, Lay’s, and Quaker Oats, also increased its earnings forecast for the remainder of the year, boosting its stock price.
In its second quarter, which ended on June 17, the company reported a 10 percent increase in revenue, to $22.3 billion, and a nearly twofold increase in profit, to $2.7 billion, compared to the same period last year. PepsiCo projected that its annual revenue would increase by 10 percent, up from its previous estimate of 8 percent.
The quarterly results surpassed analysts’ already optimistic expectations, as consumers grapple with higher prices and policymakers ponder their next steps to combat inflation.
While Pepsi’s revenue increased last quarter, fewer products were sold. The company’s product prices have increased by double-digit percentages for the past six quarters, and its sales volume has declined for the past three quarters.
In the second quarter, Pepsi’s prices were 15 percent higher than they were a year earlier. The increase was most pronounced in Pepsi’s European division, which increased by 20%. Economists and policymakers have paid particular attention to Europe’s rising food prices, citing corporate profits as a contributor to the continent’s persistently high inflation.
Pepsi’s chief executive officer, Ramon Laguarta, told analysts on a conference call Thursday morning, “We’ve been able to raise prices while consumers remain loyal to our brands.”
Mr. Laguarta attributed sustained Pepsi product sales to low unemployment rates in the United States and around the world. Last week’s data indicated that the U.S. labour market is moderating but remains robust.
Consumer prices in the United States, including food prices, have increased at a reduced rate, but are still well above the Federal Reserve’s target rate. Overall, food prices increased by 5.7% year-to-date through June.
Thursday, PepsiCo’s stock rose approximately 1 percent. The food and beverage behemoth is one of the first companies to disclose quarterly earnings, serving as a barometer for the performance of other companies. According to estimates compiled by FactSet, companies in the S&P 500 are expected to report a 7 percent decline in profits during the second quarter.
Later this month, Coca-Cola and Nestlé will report earnings. On Friday, several prominent institutions will release their quarterly results.
