Coca-Cola Company (KO.N.) increased its annual sales and profit predictions on Tuesday, marking the second time this year that the company has done so. The company attributed the increase to continued customer demand for its sodas, juices, energy drinks, and higher pricing.
In premarket trading, the company’s shares increased by more than 2% after exceeding analysts’ estimates for the third quarter’s results.
PepsiCo’s rival, PepsiCo (PEP.O), also exceeded the forecasts of experts and said that it would be raising prices in the coming year as customers continued to spend money on sodas, which are considered “affordable luxuries” in this era of rising costs of both food and living.
According to the corporation, Coca-Cola’s average selling prices increased by nine percent in the third quarter, while overall unit case volumes increased by two percent.
According to Sarah Henry, managing director and portfolio manager at Logan Capital Management, it does not appear that these pricing levels are susceptible to competition from other companies or price competition from some private label alternatives. She continued, “It doesn’t seem like certain private label alternatives are in a position to undercut these pricing levels.”
However, it is anticipated that the benefits from the increases will begin to diminish roughly two years after many enterprises that sell consumer products raised their prices to protect themselves from rising labor and transportation expenses.
Since manufacturing costs have decreased, much attention is being directed toward increasing production quantities. However, prominent companies such as Procter & Gamble are under pressure from countries like France to reduce their prices because purchasing power is still low in many places.
Compared to its previous projection of a rise of 8% to 9%, the beverage giant anticipates an increase in organic sales for the whole year between 10% and 11%.
Compared to prior projections of 5% to 6% growth, the company that makes Sprite and Fanta has projected that its annual core profits per share will increase between 7% and 8%.
According to figures provided by LSEG, third-quarter net sales increased by over 8% to $11.91 billion, which was higher than the analysts’ expectations of $11.44 billion. Earnings adjusted for one-time items came in at 74 cents per share, higher than the consensus estimate of 69 cents.
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