Beverage and snack giant PepsiCo issued a more optimistic full-year forecast after strong second quarter results driven by price increases.
PepsiCo reported quarterly revenue of $22.32 billion, up 10.4% year-over-year and beating estimates. Adjusted earnings per share came in at $2.09, topping expectations.
Core gross margin expanded 130 basis points in the quarter due to price hikes of 15% that helped offset a 2.5% drop in organic volumes. PepsiCo's North America beverages unit saw revenue jump 10% despite a 4% volume decline.
The company now expects full-year organic revenue growth of 10%, up from a previous forecast of 8%. It also raised its full-year core earnings per share guidance to $7.47 from $7.27.
PepsiCo's results demonstrate the power of pricing to offset higher costs and deliver margin expansion. Strong demand for PepsiCo's brands and products is enabling the company to pass on price increases to consumers.
PepsiCo's ability to hike prices while maintaining volume shows resilient demand from consumers. However, the company did see some volume declines, suggesting price-sensitive customers are pulling back.
Overall, the robust second quarter results and guidance hike reflect PepsiCo's efforts to navigate a challenging cost environment through a combination of pricing actions and cost controls. The company's diverse portfolio of snacks and beverages positions it well to continue delivering growth.
