- Pepsi’s third-quarter revenue grew organically by 8.8% to $23.5bn
- Underlying operating profit rose 12.1% to $4.0bn
- Full-year underlying earnings per share (EPS) growth guidance upgraded by 1 percentage point to 13.0%, ignoring exchange rates
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
“It’s been another solid quarter for Pepsi, which saw its top line bubble up at a time when consumers are really feeling the pinch. The group’s been leaving itself room to hit, and even surpass, its own guidance this year. That’s seen organic revenue guidance get upgraded two times, from 6.0% to 10.0%. Sales increased across all regions third quarter, driven almost entirely by price hikes. And unlike major rival Coca-Cola, it doesn’t limit itself to just soft drinks. Pepsi sells snack favourites like Walkers crisps, Doritos, and even some more unexpected names like Quaker Oats.
But one area for investors to keep an eye on is that the rate of sales growth has been flattening over the year. To some extent, that’s to be expected as tough comparative periods roll through. But constant price hikes are beginning to take their toll, having negative impacts on food volumes which is causing some concern in the market and has seen Pepsi’s valuation move lower in recent months. The rate of price hikes is likely to slow moving forward to help bring some stability back to the volume picture. But good progress is being made on cost-cutting initiatives which is helping to offset this and keep Pepsi’s underlying operating profit growing at double-digit rates.”
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