Earnings Forecasts in Focus – Pepsico & LVMH

Among them are food and beverage giant, Pepsico, and the world’s leading high-quality goods conglomerate, LVMH Moet Hennessy Louis Vuitton.

Below we’ll take a look at what these two companies have been up to this year so far, and what to expect for their earnings reports on Tuesday the 10th October.

Recap of Pepsico’s Q2

Despite declining demand for its beverages and foods, PepsiCo in July announced quarterly profits and sales that were above analysts’ estimates for the second quarter.

The beverage giant also increased its projection for the whole year earnings, as it did in the first quarter. The previous prediction of 8% organic sales growth was raised to 10% by 2023, and the company also increased its core constant currency profits projection from 9% growth to 12% growth.

Last quarter, Pepsi announced a $2.75 billion, or $1.99 per share, net income, up from $1.43 billion, or $1.03 per share, in the same period last year. This amounted to $2.09 per share after deduction of items.

The biggest downside for the quarter came as a result of the higher prices charged for its snacks and beverages, which diminished overall demand. Volume, excluding pricing and currency fluctuations, decreased by 3% for Pepsi’s food division and by 1% for its beverage division.

According to PepsiCo CEO Ramon Laguarta, some consumers at the time were seeking better discounts and purchasing more at dollar stores and warehouse clubs. However, the company was very pleased with its strong performance.

What to Expect for Pepsico in Q3

Despite strong performances in 2023 so far, inflationary pressures have caused the food and beverage giant’s stock to decrease 11% year to date. However, Pepsi’s prepared-food brands, such as Quaker Foods and Rice-A-Roni, continue to be key revenue generators, while the company’s investments in new brands and willingness to adapt to new trends are beginning to bear fruit. The market will be watching Pepsi closely on Tuesday to see whether the company can keep up its recent strong performance and inspire investor confidence.

According to the Zacks Consensus Estimate, the projected third-quarter sales amount to $23.4 billion, indicating a 6.5% increase compared to the reported number from the same period of the previous year.

The projected quarterly profits stand at $2.17, indicating a rise of 10.2% compared to the earnings of $1.97 recorded in the corresponding quarter of the previous year. It is worth noting that the consensus estimate has been relatively stable over the course of a month.

The results will be available before the opening bell (1:00 PM GMT) on Tuesday the 10th October.

Recap of LVMH’s Q2

In July, LVMH, the leading French luxury goods company, announced a 17% increase in revenue for the second quarter, which was slightly higher than the 16% growth predicted by analysts.

In the first half of 2023, the company’s sales were €42.2 billion, an increase of 15% over the previous half, and when compared to the same period in 2022, organic sales growth was 17%. Except for Wines & Spirits, which had a very high basis of comparison, all business segments recorded double-digit organic sales growth during the half year.

Consistent with patterns seen in the first quarter, organic sales growth was 17% in the second.

The first six months of 2023 saw a 13% increase to €11 574 million in profit from regular operations, which amounted to 27.4% of total income.

The company suggested in its outlook that in an unpredictable geopolitical and economic context, the Group would leverage its high-quality goods and excellent distribution to boost its brands’ appeal. In addition, they expected to enhance their global luxury goods leadership position by concentrating on quality across all of their businesses while capitalizing on their staff’s enthusiasm and innovation.

What to Expect for LVMH in Q3

Analysts anticipate further strong momentum in this week’s earnings report for LVMH, but the stakes are high for the company.

Investors will be looking at how US trade is doing this quarter since the 1% drop in sales in Q2 and continued rumors of a slowdown. Expectations for ongoing spending normalization in Europe might be concerning, while what might be most importantly, there will be an update on how Chinese spending is progressing amid its current economic uncertainty.

Although China has long been a leader in the luxury fashion industry and is home to flagship stores for virtually all of the major brands, the country’s economy suffered a huge blow when restrictions came in due to the pandemic. With the reopening of upscale retail centers and districts during the spring and summer, however, the area was poised for a recovery thanks to a shift in consumer attitudes. However, the outlook for the Chinese economy hasn’t been so bright lately, unfortunately, and this will likely impact sales.

While the luxury sector experiences substantial growth and is anticipated to stabilize, with some referring to it as a normalization phase, French luxury firms such as LVMH are expected to maintain profitability due to various growth drivers. These drivers include the significance of self-image, cultural shifts, appeal to younger generations, collaborations and partnerships with brands, emphasis on durability, exclusive high-end experiences, the emergence of Web 3, and other innovative communication and sales channels among others.

The company’s earnings release will follow the close of the Paris market on Tuesday, October 10th, at 3:30 PM GMT.

Disclaimer

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

ActivTrades Corp is authorised and regulated by The Securities Commission of the Bahamas. ActivTrades Corp is an international business company registered in the Commonwealth of the Bahamas, registration number 199667 B.

The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.

All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.

Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.