PepsiCo second quarter profits jump, but demand continues to slip with prices higher

PepsiCo reported higher-than-expected earnings in the second quarter even as customer demand for its snacks and drinks continued to slip.

PepsiCo said North American demand for its Frito-Lay snacks was “subdued” during the quarter. Chairman and CEO Ramon Laguarta said the company plans to amp up deals and advertising in the second half of this year.

Net income rose 12% to $3 billion, or an adjusted $2.28 per share, for the April-June period. Wall Street had expected earnings of $2.16 per share.

Revenue grew less than 1% to $22.5 billion. That was slightly lower than the $22.59 analysts forecast.

Globally, sales volumes fell 3% in the second quarter. It was the company’s eighth straight quarter of falling sales volumes. PepsiCo has said some of that volume decline is strategic, since it has been shrinking package sizes. But it has also seen lower-income U.S. customers buying fewer snacks or switching to store brands in the face of its continued price hikes.

PepsiCo, based in Purchase, New York, has leaned heavily into price increases over the past two years as its costs for ingredients and packaging rose. The fourth quarter of 2023 was the company’s eighth straight quarter of double-digit percentage price increases. Prices rose 5% in the first quarter and another 5% in the most recent quarter.

Shares slipped almost 2% before the opening bell.