A truck with a Pepsi logo is seen on a semi trailer on Interstate 95 in Maryland, United States on October 21, 2022.
Beata Zawrzel | NoorPhoto | Getty Images
PepsiCo It cut its full-year outlook for organic revenue on Tuesday after weaker-than-expected sales in its second quarter.
Aftereffects at Quaker Foods North America, weakness in U.S. demand and business disruptions in some international markets weighed on the company’s performance in the quarter, CEO Ramon LaGuarta said in a statement.
In 2024, Pepsi now expects a low single-digit rise in organic revenue, down from its previous outlook of 4% growth. The company reiterated its forecast of at least an 8% increase in core constant currency earnings per share.
Shares of the company fell 1% in premarket trading.
Here’s what the company reported compared to Wall Street’s expectations, based on LSEG’s survey of analysts:
- Earnings per share: $2.31 adjusted and $2.29 expected
- Revenue: $23.32 billion and $23.76 billion expected
PepsiCo reported third-quarter net income of $2.93 billion, or $2.13 per share, down from $3.09 billion, or $2.24 per share, a year earlier.
Excluding items, the company earned $2.31 per share.
Net sales fell 0.6% to $23.32 billion. Organic revenue, which strips out acquisitions, divestitures and currency changes, increased 1.3% in the quarter.
Demand for Pepsi’s snacks and beverages declined during the quarter. The company reported a 2% decline in volume for both its food and beverages. Last quarter, executives said shoppers across all income levels were changing their behavior.
Quaker Foods North America reported a steep decline in volume, with a 13% slide. The company issued its first recall in December for possible salmonella contamination and has since expanded it January. In June, Pepsi officially closed the recall plant, although production had already stopped.
The effects of the recall are now diminishing, Laquarta and Pepsi CFO Jamie Caulfield said in prepared remarks.
Frito-Lay’s volume in North America fell 1.5%. The company is trying to offer more value to customers and improve in-store availability with snacks including Cheetos, Sunchips and Stacey’s Pita Chips. While segment size has improved sequentially, the broad category has declined relative to historical performance.
“After outperforming packaged foods in prior years, salty and spicy snacks underperformed year-to-date,” Pepsi executives said in their prepared comments.
Volume in Pepsi’s North American soft drinks business fell 3%. Brands like Gatorade and Pepsi saw revenue growth in the quarter.
Latin America and Africa, the Middle East and South Asian markets reported declining volumes for both food and beverages.
“Friend of animals everywhere. Devoted analyst. Total alcohol scholar. Infuriatingly humble food trailblazer.”