PepsiCo Inc has forecast full-year profit above expectations after a rebound in soda sales and increased demand for snacks during the COVID-19 pandemic helped to drive quarterly sales higher.
People spending more time working and studying from home 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 third quarter, while higher demand for breakfast foods led to a 6% rise at its Quaker Foods business.
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"At home consumption trends have remained strong despite the measured reopening of economies and activities in certain areas," CEO Ramon Laguarta said.
Higher demand for Starbucks branded iced coffee as well as low calorie versions of Gatorade and Mountain Dew helped to boost revenue of PepsiCo's North America beverage business by 6%.
That helped to offset a slump in sales at restaurants, which has been hurting the unit's revenue since the start of the pandemic.
The company's decision to drop the "Aunt Jemima" branding from its pancake mix and syrups in June after it was criticised as being a racist stereotype did not impact product sales, chief financial officer Hugh Johnston told Reuters.
PepsiCo forecast full-year core earnings of $5.50 per share, above expectations of $5.36 per share, while warning that pandemic-related costs may continue to weigh on earnings next year.
Beating Analysts' Expectations
Overall net revenue rose by more than 5% to $18.09 billion during the quarter that ended on September 5, beating analysts' expectations of $17.23 billion, according to IBES data from Refinitiv.
Attributable net profit rose by 9.1% to $2.29 billion. Excluding items, the company earned $1.66 per share, beating expectations of $1.49 per share.