PepsiCo Inc and Coca-Cola Co trounced Wall Street estimates for quarterly revenue on Thursday, supported by recent price increases and robust demand but warned of runaway inflation dragging profit growth this year.
Costs from aluminum cans to labor and shipping have surged due to the pandemic-induced disruptions and the spread of the Omicron coronavirus variant, and the companies responded with price hikes.
Demand has so far held up better than feared, but signs that the fastest inflation rise in a generation may not ease soon have triggered worries that consumers may soon cut back on purchases.
PepsiCo forecast organic sales to rise 6% in 2022, slowing from last year’s near 10% growth. It expects fiscal 2022 core earnings of $6.67 per share, compared with analysts’ expectations of $6.73, according to IBES data from Refinitiv.
Coca-Cola forecast full-year adjusted earnings per share to increase 5% to 6% from the $2.32 posted in 2021, compared with estimates of a 6% rise.
Still, the companies’ shares rose about 1% in premarket trading.
PepsiCo’s net revenue rose 12.4% to $25.25 billion in the fourth quarter, beating estimates of $24.24 billion, while Coca-Cola’s adjusted revenue rose 10.1% to $9.47 billion, topping estimates of $8.96 billion
PepsiCo on Thursday also announced a 7% increase in annual dividend and a new $10 billion stock buyback program.
– Reuters