PepsiCo 'Treats' Considered Affordable By Consumers, Says CFO: 'Gives Us Some Confidence'

Shares of PepsiCo, Inc. PEP ended 0.95% higher on Thursday after the company reported better-than-expected financial results.

The company's fourth-quarter revenue increased 10.9% year-over-year to $28 billion, which beat consensus estimates of $26.84 billion.

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PepsiCo CFO Hugh Johnston said what gives them confidence is the fact that despite the current economic environment being uncertain, the company's products are seen as affordable.

"Right now we, obviously, are coming off a terrific year. We grew revenue by 14% for the full year on an organic basis, and 15% for the fourth quarter. So we have got a lot of momentum in the business right now. Why is that happening? Consumers right now and households still have pretty healthy balance sheets across many of our markets," Johnston told Bloomberg TV.

Guidance: For the full-year 2023, PepsiCo said it expects to deliver 6% organic revenue growth and 8% core earnings growth on a per-share basis. Full-year earnings are expected to come in at $7.20 per share versus estimates of $7.30 per share.

"People are nervous because of things going on in the economy, which is probably causing them to pull back more on larger discretionary purchases. Affordable treats like ours are very much viewed as something that they can afford. So that gives us some confidence going into the year," Johnston said.

Popular snack brands owned by PepsiCo include Lays, Doritos and Cheetos.

During the earnings call, Johnston also acknowledged that inflation is still out there as a factor for the company, as it is still high, though not as high as before.

The CFO said that the company is looking to drive a lot of productivity this year and continue to put investments back into the business.

"We’re looking to continue to put investments back into the business because we think that’s what’s driving the top line, and consumers are clearly responding positively to it. My expectation is that our gross and operating margins will be at least in line with where we were in 2022. And perhaps a little bit better," Johnston said.

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