PepsiCo had to write off almost half a billion dollars because of the war in Ukraine, as the soft drink producer withdrew from Russia. Nevertheless, the soda manufacturer saw its sales increase by just under 10 %.
4 % revenue loss
Like most other Western brands, PepsiCo withdrew from Russia because of the invasion of Ukraine. Previously, the Lay’s and 7Up producer was making 4 % of all its sales Russia, so the effects are showing even though the group continues to sell certain food products in the country.
The US company reports 241 million dollars (230 million euros) in direct costs, which include plant closures and lost inventory. Yet on top of that, there is the depreciation of Russian brands. In total, PepsiCo has booked 482 million dollars (450 million euros) in charges.
Caution remains
Nevertheless, PepsiCo is raising its sales forecast for 2022 after a favourable first quarter. In the three months ending 19 March, sales rose by 9.3 % to 16.2 billion dollars (15 billion euros). Both prices and sales volumes increased. “Given the strength and resilience of our business to date, and taking into account higher than expected raw material cost inflation for the remainder of 2022, we now expect our organic sales for the full year to grow by 8 %”, CEO Ramon Laguarta said. Previously, the company had expected a 6 % growth.
Despite the costs in Russia, net profit more than doubled to 4.3 billion dollars (4 billion euros). For the full year, however, the group is lowering its forecast, mainly due to currency effects, but the soft drinks producer also warns that the effects of the conflict could extend further, such as volatile raw material markets and supply chain disruptions.
