PURCHASE, NY. — Organic revenue for PepsiCo, Inc. increased 16% in the third quarter ended Sept. 3 as consumers kept buying the company’s products despite recent price hikes.
“Clearly, a 16% quarter is an outstanding quarter,” said Ramon L. Laguarta, chief executive officer, in an Oct. 12 earnings call. “With a lot of pricing, we don’t think that’s a sustainable performance for the business, but obviously, we’re aspiring to beat our long term as many quarters as possible.”
PepsiCo’s long-term guidance on revenue growth is 4% to 6%, said Hugh F. Johnston, chief financial officer.
“Obviously, we’ve seen elasticity continue to be strong and stronger than expected through three quarters of the year,” he said.
Executives of Purchase-based PepsiCo now expect full-year organic revenue growth of 12%, up from 10%, and full-year core constancy earnings per share to grow 10%, up from 8%.
Net income in the quarter was $2.70 billion, or $1.95 per share on the common stock, up 21% from $2.24 billion, or $1.60 per share, in the previous year’s third quarter. Net revenue came in at $21.97 billion, up 9% from $20.19 billion in the previous year’s third quarter. PepsiCo’s share price on the Nasdaq closed at $169.39 per share on Oct. 12, up more than 4% from a previous close of $162.59.
Within PepsiCo Beverages North America, net revenue increased 3.6% to $6.64 billion. Organic revenue growth was 13%. Mr. Laguarta pointed to the recovery of the Gatorade brand.
“We have invested a lot for the last couple of years,” he said of Gatorade. “Our innovation is working. Our brand building is working. Our commercial execution is working, and we gained meaningful share in the quarter, which makes us very happy, obviously, given the efforts the team has put in that brand.”
Recent innovations Gatorade Zero, Gatorlyte and G Fit have brought more consumers to the brand, he said.
PepsiCo also is gaining market share in tea and coffee, he added, but is losing share in carbonated soft drinks.
“I would say Pepsi is doing quite well,” Mr. Laguarta said. “Mountain Dew is a brand that we’re working on to continue to gain share.”
Net revenue increased by double-digit percentages in the Gatorade, Pepsi and Rockstar brands in the quarter.
In Frito-Lay North America, net revenue rose 20% to $5.56 billion from $4.65 billion. The segment achieved 20% organic revenue growth and gained share in the macro, savory and salty categories.
In Quaker Foods North America, net revenue rose 15% to $713 million from $618 million. Organic revenue growth was 16%. The segment gained share in the rice and pasta, light snacks, ready-to-eat cereal, and hot cereal categories.
International segments Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia, New Zealand and China all had revenue increases as well.
Through the first three quarters of the fiscal year, PepsiCo had net income of $8.39 billion, or $6.04 per share on the common stock, up 33% from $6.30 billion, or $4.54 per share, in the same time of the previous year. Third-quarter net revenue of $58.40 billion was up 8% from $54.23 billion.