In the third quarter of 2024, PepsiCo faced challenges with a slight decline in net revenue, but managed to increase core EPS to $2.31.

In the third quarter of 2024, PepsiCo (PEP) reported a slight decline in net revenue, with a decrease of 0.6% compared to the same period in the previous year.

The company faced challenges such as subdued category performance trends in North America and disruptions due to geopolitical tensions in international markets. Despite these hurdles, PepsiCo’s core EPS showed resilience, increasing to $2.31, a 5% rise in constant currency terms, signaling effective cost management and strategic investments aimed at enhancing market competitiveness.

Chairman and CEO Ramon Laguarta highlighted the company’s efforts to maintain profitability through strong cost controls and incremental investments. He acknowledged the impact of certain recalls at Quaker Foods North America, which contributed to a 13% decline in net revenue for that division. Meanwhile, Frito-Lay North America saw a 1% decrease in net revenue, and PepsiCo Beverages North America managed a slight increase of 1% in organic revenue despite a 3% decline in reported figures.

PepsiCo’s Third-Quarter Performance Falls Short of Market Expectations

PepsiCo’s third-quarter performance fell short of market expectations in terms of earnings per share (EPS) and revenue. The company reported a GAAP EPS of $2.13, below the anticipated $2.29. However, on a core basis, which excludes certain items, the EPS was slightly above expectations at $2.31. This suggests that while the reported figures were impacted by external factors, the underlying business remained solid.

Revenue for the quarter was $23.319 billion, missing the expected $23.9 billion. This shortfall can be attributed to the various challenges faced by the company, including the Quaker Foods recall and geopolitical issues affecting international operations. The foreign exchange impact further compounded these challenges, leading to a 2% negative effect on net revenue.

Despite these setbacks, PepsiCo’s ability to exceed core EPS expectations indicates that its strategic initiatives and cost management efforts are bearing fruit. The company’s focus on maintaining profitability through operational efficiencies and targeted investments has helped mitigate some of the adverse impacts on its financial performance.

PepiSo Adjusts Financial Guidance for Remainder of 2024

PepsiCo has adjusted its financial guidance for the remainder of 2024. The company now anticipates a low-single-digit increase in organic revenue, a revision from the previously expected 4% growth. This adjustment reflects the ongoing challenges in the market, particularly in North America, and the broader economic environment.

PepsiCo remains committed to achieving at least an 8% increase in core constant currency EPS. The company plans to continue investing in commercial activities and brand support to drive consumer demand, while also focusing on productivity initiatives to manage costs effectively. These efforts are expected to support the company’s profitability and growth objectives in a subdued growth environment.

In terms of shareholder returns, PepsiCo expects to deliver approximately $8.2 billion in total cash returns, including $7.2 billion in dividends and $1.0 billion in share repurchases. The company also anticipates a core annual effective tax rate of 20% and a 1-percentage-point foreign exchange translation headwind impacting reported net revenue and core EPS growth.

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