PepsiCo rides strong organic sales to offset some cost pressures
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PepsiCo (NASDAQ:PEP) tracked slightly higher in Thursday morning trading after topping expectations with its Q4 earnings report.
Organic sales increased 11.9% during the the quarter. The Frito-Lay North America (+13%), Latin America (+17%) and PepsiCo Beverages North America (+12%) segments all recorded strong growth to offset a slower pace in Africa, Middle East and South Asia (+8%) and Quaker Foods North America (+9%).
Operating profit decreased 10% for the PepsiCo Beverages North America segment, primarily reflecting certain operating cost increases, including incremental transportation costs, a 37-percentage-point impact of higher commodity costs and higher advertising and marketing expenses. Those impacts were partially offset by net revenue growth and productivity savings.
Looking ahead, PepsiCo (PEP) expects to deliver 6% organic revenue growth in 2022, which is at the high-end of its long-term target range and implies a strong acceleration in the organic revenue growth on a two-year basis. The consensus expectation for organic sales was +5.4%. The beverage giant also expects to deliver 8% core constant currency earnings per share growth. That guidance reflects the impact of inflationary pressures across the PEP value chain and planned investments in the business.
Shares of PepsiCo (PEP) rose 0.25% to $172.37 following the top and bottom line beat.