PepsiCo’s quarterly net revenue surpassed analysts’ expectations following price hikes for its food and beverage products.
The New York-based conglomerate’s net sales rose 10.9% to $28 billion in Q4 2022 against analysts’ estimate of $26.9 billion. Organic revenue, which excludes the impact of acquisitions and divestitures, rose 14.6% during the quarter.
Additionally, earnings per share came in at $1.67 adjusted versus $1.65 projected.
However, the price increases negatively impacted consumer demand in some areas. Volume, which does not account for pricing and currency fluctuations, dropped 7% at Quaker Foods North America and 2% at the North American beverage division. Yet, the company still has plans to offset the impact of continued inflationary pressures by “sharpening [its] revenue management capabilities,” according to a press release.
One innovation that did resonate with consumers was Pepsi Zero Sugar’s improved formula, which launched in January. Volume for the drink grew 26% during Q4, according to PepsiCo senior vice president of investor relations Ravi Pamnani.
“Zero is clearly a segment of the beverage category that is growing much faster than full sugar all over the world,” he said during the call. “This is going to be the center of the strategy for the Pepsi brand.”
PepsiCo also reported Q4 net income of $518 million, or 37 cents per share down from $1.32 billion, or 97 cents per share, the year prior.
“Moving forward, we will continue to focus on driving growth and winning the marketplace while developing advantaged capabilities to fortify our businesses for the long term,” said chairman and CEO Ramon Laguarta in a prepared statement. “This includes embedding pep+ at the center of our business in how we innovate, operate, run our teams and build our brands.”
Looking ahead to 2023, the food and beverage giant expects a 6% increase in organic revenue and 8% core constant currency earnings per share. Additionally, PepsiCo announced a 10% increase in its annualized dividend to $5.06 per share from $4.60 per share, effective with the dividend slated to be paid in June.
“Six percent revenue growth in consumer products is a very healthy growth rate and we certainly feel good about that as the guide. Would we expect volumes to be down? Perhaps they’ll be down a little bit,” said CFO Hugh Johnston during the call, noting it wouldn’t be “shocking” if there were a mild recession in the U.S. and PepsiCo’s developed markets.