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in view of the performance this year, PepsiCo raised its forecast for this fiscal year.
On July 12, PepsiCo, a global beverage and snack giant, announced its results for the second quarter of 2022 (up to June 11) and updated its full year outlook.
Thanks to the growth of PepsiCo’s product sales in this quarter and its advantageous price and combination, the report shows that PepsiCo’s sales in the second quarter of 2022 were $20.2 billion, an increase of 5.3% over the same period last year; The operating profit in the second quarter was US $2.1 billion, down 33.6% year-on-year. Among them, the revenue of beverage business increased by 8% year-on-year, and the revenue of convenience food business increased by 17% year-on-year. The comprehensive gross profit increased by 4.6% over the previous year, reaching 10.81 billion yuan.
Source: PepsiCo official website
In terms of specific business, PepsiCo’s food sales business performed particularly well.
Among them, the sales of frito lay North America, which mainly sells potato chips and other snack foods, increased by 14% to US $5.2 billion, while the sales of Quaker Foods North America increased by 17% to US $675million. In contrast, PepsiCo Beverages North America’s overall net income fell slightly, by 1%, but its sales volume was still $6.1 billion.
In terms of regions, PepsiCo’s Latin American business grew the fastest, with its net income increasing by 23%; Organic revenue in North America increased by 11%; International business increased by 15%.
At present, PepsiCo’s core earnings per share in the second quarter was $1.86, an increase of 8.1% year-on-year. In addition, thanks to measures such as cost management and revenue management, PepsiCo’s core profit increased by 10% over the same period last year.
In this regard, Ramon laguarta, chairman and CEO of PepsiCo, is optimistic about the future prospects. He said that despite the impact of macroeconomic and geopolitical turmoil, PepsiCo’s business is still growing, and most of the international market strength is strong.
In view of the performance this year, PepsiCo raised its forecast for this fiscal year. PepsiCo said it expected its annual revenue to grow by 10% in 2022, higher than the previous forecast of 8%. This marks that the company has raised its revenue forecast for two consecutive quarters without updating its earnings guidance.
Based on the above assumptions, Pepsi reiterated its core view of earning $6.63 per share in 2022, which also means that this will increase by 6% from $6.26 in 2021. Moreover, the company expects that the core constant exchange rate earnings per share will increase by 8% over the same period last year, and the core annual effective tax rate will be 20%.
In addition, PepsiCo is still committed to rewarding shareholders through dividends and share repurchases. The company expects to provide a total cash return of $7.7 million to shareholders, including $6.2 million in cash dividends and $1.5 billion in share repurchases.
Pepsi in China
As part of PepsiCo’s international business, we can pay attention to and review PepsiCo China’s actions and performance in the second quarter.
In terms of new products, at the beginning of April, Xiao Zhan, the official spokesman of Pepsi Cola, launched a new flavor of Taiqi Series in China, white pomelo and green bamboo flavor, which combines the fragrance of bamboo and the freshness of pomelo into coke. In terms of packaging, it also adopts packaging design with national style elements, setting off a national style upsurge in China.
In terms of brand activities, PepsiCo successively cooperated with partners such as hungry, Mao xuewang and Shanghai Fashion Week in the second quarter, and sponsored Jay Chou Concert, European Champions League, BiliBili summer Graduation Concert and other activities to continue to build and expand brand influence.
In terms of sustainability, in response to the call of world earth day, Pepsi launched a bottle free Pepsi Cola to support the development of sustainable undertakings by reducing plastic and ink printing, and using low-carbon environmental protection materials containing 24% recycled plastic.
In terms of public welfare, PepsiCo has also jointly launched the “star watch program” public welfare activity with China Resources Vanguard. Together with Shenzhen public welfare foundation, PepsiCo has carried out care activities for groups with mental disabilities, providing services and support in many fields, such as escort, sports therapy, employment assistance, etc., to help more groups and families with mental disabilities get attention and growth.
Slide to view some activities
Image source: PEPSI CHINA
It can be seen that PepsiCo’s profit margin has declined due to the rise in freight and commodity costs this quarter.
To this end, CEO Ramon laguarta said that PepsiCo has accelerated the launch of its cost management plan, using “hybrid and classification solutions”, such as using smaller packaging to strictly manage costs, in order to better support business growth. On the other hand, PepsiCo will also adhere to the consumer centered guiding principle and optimize infrastructure to further strengthen its revenue management ability in brand and packaging.
However, as the world’s fourth largest food and beverage company, Pepsi’s influence in China and the world is beyond doubt. Although the global inflation rate has remained high for decades, the food and beverage giant is still proud that its demand for soft drinks and snacks will not be greatly affected.
Hugh Johnston, chief financial officer of PepsiCo, told Reuters, “the company has not seen a slowdown in demand due to the price increase at the end of last year, and there is still room for further price increases.”
Source: PepsiCo official website
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