Coke and PepsiCo Earnings Show Big Sales Gains on Big Price Increases

Both companies said inflationary pressures hurt their profits as costs rose for trucking, agricultural commodities and packaging. Coke’s operating income fell 28% in the quarter; PepsiCo’s operating profit fell 9%. Still, the results were better than Wall Street forecasts.

Coke said the fourth quarter of 2021 was the first period since the pandemic’s start that the volume of its sales in restaurants and other eat-in venues was ahead of 2019. The Covid-19 pandemic in 2020 shut restaurants, bars, sports stadiums and movie theaters around the world.

Coke Chief Executive James Quincey said he expects supply-chain disruptions to improve in 2022, along with the effects of the pandemic, but he cautioned: “It’s not going to be back to 2019 fully in 2022.”

Hugh Johnson, PepsiCo’s chief financial officer, said he is preparing for the possibility that cost pressures could continue into 2023. Chief Executive Ramon Laguarta added that recent price increases haven’t turned away consumers. “We have consumers following us in spite of higher prices,” he said.

Coke and PepsiCo, two of the world’s biggest advertisers, said they ramped up marketing spending during the most recent quarter. Coke, an Olympic sponsor, has been running an Olympics-themed marketing campaign in China, though not in the U.S. or other markets. PepsiCo boosted marketing in the quarter around the National Football League ahead of the Super Bowl.

Both companies have been revamping their product portfolios to adapt to changing consumer tastes. Coke in November struck a $5.6 billion deal to take full control of BodyArmor, a sports drink that has been growing sales faster than Coke’s soda business. PepsiCo recently closed on the sale of its Tropicana juice business, which has been posting sales slower than other units.

Like other consumer-goods companies and manufacturers, the two soda rivals have faced higher prices for inputs including the sugar in their drinks, the aluminum that they use for cans and the cost of shipping their products around the world. U.S. inflation accelerated to a 7.5% annual rate in January, rising to a four-decade high, the Labor Department said Thursday.

Mr. Quincey said the pandemic exacerbated underlying supply-chain problems such as unavailability of truckers and inadequate supply of aluminum. “Everyone, including ourselves, are very involved in fixing them,” he said.

For 2022, Coke said it expects organic revenue growth of 7% to 8%. It forecast adjusted earnings per share growth of 5% to 6% from 2021, excluding currency swings. Beyond its namesake soda, the company owns smartwater, Minute Maid juices, Gold Peak tea and Costa Coffee.

Mr. Laguarta said that in recent months, PepsiCo has seen some improvements in its supply chain throughout North America. The company forecast 6% organic revenue for 2022 growth and an 8% increase in core earnings per share, excluding currency swings.

Mr. Laguarta said PepsiCo isn’t currently exploring any new acquisitions and that the company, which also owns Gatorade, Mountain Dew, Cheetos and Quaker oats, has sufficient brands to fuel its current strategy.

Shares of the two rivals have surged in the past year and are trading near all-time highs. Coca-Cola shares rose 1%, while PepsiCo slipped about 1.5% in early Thursday trading.

—Jacob Gallagher contributed to this article.

Write to Jennifer Maloney at [email protected]