Next week on the stock market

Back in July, it was another weak showing on the revenue front for Pepsi, which saw the full-year outlook get downgraded. Second-quarter revenue grew just 1.9% on an organic basis, as higher prices were partly offset by flat drink volumes and food volumes which fell by 2.0%. Underlying operating profits grew at a faster pace of 7% though as the group squeezed out productivity savings. But remember, cost cuts are more like a plaster than a long-term treatment.

Looking to next week’s results, we’re expecting cost inflation to ease which should slow the rate of price hikes and hopefully revive some demand for Pepsi’s products. Growth from a more sustainable mix of both price and volume would be welcome. But for that to happen, the group can ill afford another product recall like the Quaker Oats debacle earlier this year, where there were concerns of potential contamination with Salmonella.

Strong pricing in Imperial Brands’ first half more than offset the continued structural decline in tobacco volumes. With inflation easing, price rises may get harder to push though. In next week’s trading update, we’ll find out if the Lambert and Butler manufacturer has managed to keep organic growth moving in the right direction.

There’s also growing pressure for Next Generation Products (NGPs), including products like heated tobacco and vapes, to make a bigger contribution. Revenue in this segment grew by 16.8% in the first half, but it’s a tiny part of the picture. Management will be hoping that recent product launches and marketing initiatives will see that level accelerate.

Imperial’s cash generation supports generous payouts to shareholders, who will be keen for a progress update on this year’s targeted returns of £2.4bn, as well as longer-term commitments to dividends and buybacks.