PepsiCo sees strong annual profit as snacks, sodas thrive in pandemic

[BENGALURU] PepsiCo forecast full-year profit above expectations on Thursday after a rebound in soda sales and increased demand for snacks during the Covid-19 crisis helped drive quarterly sales higher.

People spending more time working and studying from home has led to a rise in demand for salty snacks, boosting demand for PepsiCo's Tostitos, Cheetos and Doritos from households across North America.

Sales of snacks under the company's Frito-Lay North America unit, rose 7 per cent in the third quarter, while higher demand for breakfast foods led to a 6 per cent rise at its Quaker Foods business.

"At home consumption trends have remained strong despite the measured reopening of economies and activities in certain areas," chief executive officer Ramon Laguarta said.

Higher demand for Starbucks branded iced coffee, as well as low calorie versions of Gatorade and Mountain Dew helped boost revenue of PepsiCo's North America beverage business by 6 per cent.

That helped offset a slump in sales at restaurants, which has been hurting the unit's revenue since the start of the pandemic.

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The company's decision to drop the "Aunt Jemima" branding from its pancake mix and syrups in June after being criticised as a racist stereotype did not impact product sales, chief financial officer Hugh Johnston told Reuters.

PepsiCo forecast full-year core earnings of US$5.50 per share, above expectations of US$5.36 per share, while warning that pandemic-related costs may continue to weigh on earnings next year.

Overall net revenue rose more than 5 per cent to US$18.09 billion in the quarter ended Sept 5, beating analysts' expectations of US$17.23 billion, according to IBES data from Refinitiv.

Attributable net profit rose 9.1 per cent to US$2.29 billion.

Excluding items, the company earned US$1.66 per share, beating expectations of US$1.49 per share.

REUTERS