PepsiCo (NASDAQ:PEP) 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.
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.
Its rival, Coca-Cola (NYSE:KO) is fighting similar headwinds.
So far, customers are still buying — despite those new price tags.
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, topping the $1.52 per share expected by analysts.
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.
Pepsi’s chief financial officer, Hugh Johnston, acknowledged cost challenges, but said the company has the brand loyalty and pricing power to "get through the year with our margins pretty well intact."
Johnston added on an earnings call Thursday that he anticipates Pepsi will raise prices again.
PEP shares lost $1.41 to $170.53.
