PepsiCo Inc (PEP.O) on Thursday beat analysts' estimates for fourth-quarter revenue and profit, benefiting from price hikes for its sodas and snacks to tackle rising costs.
A near duopoly in the carbonated drinks market with Coca-Cola Co (KO.N) helped PepsiCo raise prices over the last few quarters with little pushback as it battles higher freight, commodity and labor costs, as well as the impact of a stronger dollar on international revenue.
PepsiCo expects inflationary pressures to persist in 2023 and even though it sees resilient consumer demand, the company said it was keeping an eye out for a shift in consumer spending.
The Frito-Lay maker forecast annual profit below Wall Street estimates, signaling multiple price hikes were likely to dampen demand for its sodas and snacks amid a cost-of-living crisis.
PepsiCo's shares rose 1.6% to $174 in premarket trading after it also raised its annualized dividend by 10% to $5.06 per share.
PepsiCo's Quaker Foods North America unit saw operating profit fall about 3% to $188 million as higher production costs took a bite out of margins.
On an adjusted basis, the company earned $1.67 per share in the fourth quarter, beating estimates of $1.65, according to Refinitiv data.
PepsiCo reported net revenue of about $28 billion, compared with estimates of $26.84 billion.
The company's average prices jumped 16%, while organic volume slipped 2%.
PepsiCo said it expects fiscal 2023 core constant currency earnings of $7.20 per share, compared with estimates of $7.28.
