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PepsiCo beats on fourth-quarter earnings, but warns of cost pressure

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In this photo illustration PepsiCo products are shown on October 05, 2021 in Chicago, Illinois.
Scott Olson | Getty Images

PepsiCo on Thursday beat quarterly revenue expectations by more than $1 billion, but warned that it is costing more to make its snacks and sodas and get them to store shelves.

Shares rose about 1% in premarket trading, despite the company’s full-year outlook falling short of what analysts predicted.

Pepsi is feeling the impacts of inflation across its businesses. With Frito-Lay North America, the maker of Lay’s potato chips and Cheetos, it has had to pay more for cooking oil and packaging. With PepsiCo Beverages North America, it said transportation and commodities have become pricier.

Some of those higher costs are getting passed on to customers. The company already hiked prices on products. In October, Chief Financial Officer Hugh Johnston told CNBC’s “Squawk Box” that the company anticipated another price increase in the fiscal first quarter of 2022.

So far, customers are still buying — despite those new price tags.

Its rival, Coca-Cola is fighting similar headwinds.

The company said it also had higher advertising and marketing expenses in the fourth quarter for some brands, including Quaker Foods North America and PepsiCo Beverages North America.

Here’s what the company reported compared with what Wall Street was expecting for the fiscal fourth-quarter ended Dec. 25, based on a survey of analysts by Refinitiv:

Earnings per share: $1.53 adjusted vs. $1.52 expected
Revenue: $25.25 billion vs. $24.24 billion expected

The food and beverage giant’s net income for the quarter came in at $1.32 billion, or 95 cents per share. That’s down from $1.85 billion, or $1.33 per share, a year earlier.

Excluding items, Pepsi earned $1.53 per share, toppingthe $1.52 per share expected by analysts surveyed by Refinitiv.

Net sales increased 12% to $25.25 billion, higher than expectations of $24.24 billion.

The company’s organic revenue, which strips out the impact of acquisitions and divestitures, rose 11.9% in the quarter. In 2022, Pepsi said it expects organic revenue growth of 6%.

Frito-Lay saw its organic revenue increase by 13% for the quarter. Pepsi’s North American beverage business reported organic revenue growth of 12%. Quaker Foods North America saw its organic revenue increase by 9%. And among the company’s global parents, Latin America saw the biggest quarterly jump, with 17% organic revenue growth.

Pepsi said it expects to return about $7.7 billion to shareholders in the coming year, including dividends of $6.2 billion and share buybacks totaling $1.5 billion.

Shares of Pepsi are up 23% over the past 12 months. The company’s stock closed Wednesday at $171.94, bringing the company’s market value to $237.73 billion.

Read the company’s press release here.

This story is developing. Please check back for updates.

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