PepsiCo bets on price hikes to again raise annual profit forecast

(Reuters) - PepsiCo Inc on Tuesday raised its annual profit forecast for a third time this year, as the company banks on the multiple price increases it undertook across its major markets and resilient demand for its snacks and beverages.

The company's shares rose nearly 2% in premarket trading.

PepsiCo and rival Coca-Cola have been largely shielded from the effects of price hikes due to their near-domination of the global carbonated drinks market, as well as cost-conscious consumers spending on products categorized as "affordable luxuries".

PepsiCo has also benefited from its large snacks business that sells everything from Doritos to Cheetos.

The company's average prices jumped 11% in the third quarter ended Sept. 9, while organic volume slipped 2.5%. That compared with an average price increase of 16% in the first quarter of 2023.

Net revenue rose to $23.45 billion in the quarter from $21.97 billion a year earlier, edging past estimates of $23.39 billion, according to LSEG data.

Investors have been concerned about prices denting demand with countries like France urging major consumer good companies to bring down product prices that were raised to offset higher costs resulting from pandemic-related supply chain snags and the Russia-Ukraine war.

PepsiCo expects fiscal 2023 core earnings per share of $7.54, compared with its prior forecast of $7.47. The company estimated core earnings per share of $7.20 when it provided its annual forecast for the first time in February.

The company said it continues to expect 2023 organic revenue to rise 10%.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)