Pepsi bottles are seen on the food market in Las Vegas, United States on November 17, 2023.
Jakub Porzycki | Nurphoto | Getty Images
PepsiCo on Friday reported mixed quarterly results as North American demand for its food and drinks weakened.
CEO Ramon Laguarta said that U.S. sales broadly slowed down within the fourth quarter.
“A part of that may be a slowdown as a result of pricing and [consumers’] disposable income situation,” he told investors on the corporate’s conference call.
He added that U.S. consumers are also shifting their behavior from eating and drinking at home to picking up more of their snacks and Gatorade from convenience stores. But Laguarta expressed optimism in regards to the overall state of the buyer, citing low unemployment and hopes that rates of interest will fall by the summer and wages will rise faster than inflation.
Shares of the corporate fell 3% in morning trading.
Here’s what the corporate reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.78 adjusted vs. $1.72 expected
- Revenue: $27.85 billion vs. $28.4 billion expected
Pepsi reported fourth-quarter net income of $1.3 billion, or 94 cents per share, up from $518 million, or 37 cents per share, a 12 months earlier.
Excluding items, the food and beverage giant earned $1.78 per share.
Net sales dropped lower than 1% to $27.85 billion. It’s the primary quarter since 2020 that the corporate’s quarterly revenue has declined compared with the year-ago period. Currency exchange rates dragged net sales down by 1.5%.
Pepsi’s organic revenue, which excludes acquisitions and divestitures, rose 4.5% within the quarter, helped by higher prices. But those self same raised prices have hurt demand for the corporate’s food and drinks. Pepsi’s volume, which strips out pricing and currency changes, slid again this quarter.
PepsiCo executives said high borrowing costs and lower personal savings have squeezed consumers’ budgets, particularly in North America, in prepared remarks released ahead of the corporate’s conference call. In addition they said consumers are increasingly selecting smaller pack sizes for convenience and their low price points.
Pepsi’s North American Quaker Foods division reported an 8% decline in volume. A voluntary recall of its granola bars and cereals hurt its sales in the course of the quarter, together with weaker growth for the general category.
Frito-Lay North America, which incorporates brands like Cheetos and Doritos, posted a 2% drop in volume.
Pepsi’s North American beverage unit saw its volume fall 6% within the quarter.
For 2024, Pepsi now anticipates organic revenue will rise at the least 4% and core constant currency earnings per share will climb at the least 8%. The corporate previously forecast a rise in organic revenue on the high end of 4% to six% and core constant currency earnings per share growth within the high single digits.
“Consumers are more likely to remain watchful with their budgets and choiceful with their purchases,” Pepsi executives said within the prepared remarks.
Pepsi is predicting a weaker first half of the 12 months as product recalls dent its North American Quaker Oats business and international conflicts hurt sales in some regions. Executives predict international organic revenue growth to top that of North America for the total 12 months.
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