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What’s happening: Shares of PepsiCo edged higher on Thursday, after the company released results for its second quarter.
What happened: The maker of the Pepsi soft drink and Lays potato chips reported better-than-expected earnings for the latest quarter on Thursday.
However, the company failed to meet revenue expectations amid weak sales of snacks and soda.
How were the results: The Purchase, New York-based company reported some growth in sales for the second quarter.
Why it matters: PepsiCo recently announced a series of price hikes, which exerted pressure on overall sales for the second quarter. The company raised its average product prices by 5% in the latest quarter, while led to a 3% contraction in overall organic volumes.
Rising competition from private-label brands also weighed on the company’s snacks and soda. PepsiCo faced stiffening competition mostly in the US, its largest market. Persistent inflation also forced customers to limit their spending on snacks, impacting the company’s overall business.
Net revenue from Frito-Lay North America fell 0.5% year-over-year, while Quaker Foods North America sales contracted by 18%. Revenue from PepsiCo Beverages North America gained 1% in the quarter.
Latin America sales climbed 7% year-over-year, while Europe sales increased 2.5% in the second quarter.
The company’s operating margins expanded by 160 basis points to 18%, while operating income rose 10.6% to $4 billion.
Management guided to organic revenue growth of around 4% for fiscal 2024 and earnings growth of at least 8%.
How shares responded: PepsiCo’s shares gained 0.2% to close at $163.95 on Thursday, following the release of quarterly results. The stock has lost around 5% year to date.
What to watch: Investors will continue monitoring price hikes by the company, which could impact overall sales volumes ahead. Markets will also focus on PepsiCo’s plans to add some fresh flavours to its brands like Lay’s, Cheetos and Doritos.
Context: The CAD/USD forex pair edged lower on Thursday, after hitting an eight-week high earlier in the session.
Details: Amid lack of major economic data releases from Canada on Thursday, investors focussed on the inflation report from the US. The Consumer Price Index inflation in the US eased more than expected in June, fuelling prospects of the Federal Reserve cutting interest rates soon. On a monthly basis, CPI inflation fell by 0.1% in June, representing the lowest reading since May 2020.
Weakness in the US dollar lent support to the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.5% to 104.44 on Thursday, after earlier dipping to its lowest since June 7.
Some strength in the price of crude oil, one of Canada’s major exports, limited the overall losses for the loonie. WTI crude oil for August delivery gained 52 cents to close at $82.62 per barrel on Thursday.
The CAD/USD forex pair edged lower to 1.3634 on Thursday, after climbing to an eight-week high earlier in the session. The S&P/TSX Composite Index gained 0.87% to close at 22,544.13.
What to watch: Investors await the release of data on building permits from Canada today. The total value of building permits, which jumped by 20.5% in April, are expected to decline by 5.9% in May.
The release of producer price inflation from the US will also remain in focus. Analysts expect factory gate prices in the US to increase 0.1% in June, compared to a 0.2% decline in May.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.36%, 0.69%, 0.71% and 0.60%, respectively.
NATO leaders have promised to provide at least $43 billion in military assistance to Ukraine within the next year to help in its ongoing war with Russia. The news sent the safe-haven US dollar index higher in forex trading this morning.
Singapore’s economy grew by 2.9% year-over-year in the second quarter. This being lower than the 3% expansion in the prior quarter exerted pressure on the SGD/USD forex pair.
New Zealand’s electronic card transactions fell by 1.1% to NZ$6,389 million in June, sending the NZD/USD pair lower in forex trading this morning.
Peru’s trade surplus widened to $1,694 million in May, from $923.4 million in the year-ago month, lending support to the PEN/USD forex pair.
Brazil’s retail sales grew by 1.2% in May, up from the 0.9% gain recorded in the prior month. However, the BRL/USD pair remained under pressure in forex trading this morning.
Germany’s wholesale prices, France’s inflation rate and current account, Spain’s inflation rate, Turkey’s current account, India’s value of loans, deposit growth, foreign exchange reserves, industrial output and manufacturing production, Mexico’s industrial production, US University of Michigan consumer sentiment, Baker Hughes crude oil rigs and Baker Hughes total rigs, Germany’s current account, Russia’s balance of trade, Brazil’s industrial entrepreneur confidence index, China’s new yuan loans, money supply M2, outstanding yuan loans and total social financing, as well as Argentina’s inflation rate.
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