PepsiCo recently reported their quarterly earnings and revenue, both of which surpassed analysts’ expectations. However, the company still faced challenges in the U.S. market due to weaker demand. This was primarily caused by Quaker Oats recalls and the backlash to the higher prices of their drinks and snacks. Despite beating revenue expectations, PepsiCo experienced a more than 2% drop in their shares in morning trading.
In terms of earnings, PepsiCo reported adjusted earnings per share of $1.61, exceeding the expected $1.52. The company also reported revenue of $18.25 billion, surpassing the estimated $18.07 billion. Net income attributable to the company was $2.04 billion, or $1.48 per share, up from $1.93 billion, or $1.40 per share, in the previous year. While the company’s organic revenue increased by 2.7%, the volume of their products experienced a decline.
PepsiCo, like many of its competitors, faced a decrease in volume due to the higher prices of its products. The food division of the company saw a 0.5% decrease in volume, while the beverage segment reported flat volume. Additionally, the recall of Quaker Foods cereals and bars further impacted PepsiCo’s volume. The North American Quaker Food division experienced a significant 22% decline in volume due to the recalls, which led to a 1% decrease in Pepsi’s organic volume.
PepsiCo has taken steps to address these challenges by closing a Quaker Oats plant and resuming limited production of affected products. The company’s CEO, Ramon Laguarta, highlighted efforts to target lower-income consumers in the U.S. and maintain them as customers. Despite challenges in the U.S. market, PepsiCo experienced stronger demand outside of the country. Regions such as Asia-Pacific, Australia, New Zealand, China, and Europe reported growth in volume for both snacks and beverages.
PepsiCo reaffirmed its 2024 outlook, expecting organic revenue to increase by at least 4% and core constant currency earnings per share to rise by at least 8%. The company aims to see a normalization and moderation in category growth rates compared to previous years.
While PepsiCo has demonstrated resilience by exceeding revenue and earnings expectations, the company faces challenges in the U.S. market due to weaker demand and recalls. By addressing these issues and focusing on targeting key consumer demographics, PepsiCo aims to overcome these challenges and continue its growth trajectory.
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