PepsiCo, one of the world’s leading food and beverage companies, recently reported its quarterly results, which left investors disappointed. The company’s earnings per share came in at $1.78 adjusted, falling short of the $1.72 expected by Wall Street analysts. Similarly, PepsiCo’s revenue of $27.85 billion fell below expectations of $28.4 billion. As a result, the company’s shares plummeted over 2% in premarket trading.
While PepsiCo experienced an increase in net income for the fourth quarter, with $1.3 billion or 94 cents per share, compared to $518 million or 37 cents per share in the previous year, its net sales took a hit. The company’s net sales dropped by 0.5% to $27.85 billion. However, it’s worth noting that the company’s organic revenue, which excludes acquisitions and divestitures, did see a 4.5% growth in the quarter, primarily driven by higher prices.
Despite the modest revenue growth, PepsiCo faced challenges with its volume, reflecting a decline in demand for its products. Particularly, its North American Quaker Foods division reported an 8% decrease in volume due to a voluntary recall of granola bars and cereals, which significantly impacted its sales. Moreover, Frito-Lay North America, including popular brands like Cheetos and Doritos, experienced a 2% drop in volume. The North American beverage unit of PepsiCo’s business also saw a substantial decline, with a 6% fall in volume.
Looking ahead, PepsiCo aims to regain momentum and drive growth over the coming years. The company now anticipates organic revenue growth of at least 4% and core constant currency earnings per share growth of at least 8% by 2024. This revised forecast follows its previous expectations of organic revenue growth ranging from 4% to 6% and core constant currency earnings per share growth in the high single digits.
PepsiCo’s most recent quarterly results showcased a mixed performance. While the company managed to improve its net income, it fell short of revenue expectations, primarily due to weakened demand in North America. The decline in volume for its Quaker Foods, Frito-Lay North America, and North American beverage units further highlighted the challenges PepsiCo faces. Moving forward, the company’s revised outlook indicates its commitment to driving growth and capturing market share in the highly competitive food and beverage industry. Investors will closely monitor PepsiCo’s strategies and execution in the coming years to assess its ability to deliver on its revised targets.
Leave a Reply