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PepsiCo (PEP) Q2 2024 Earnings
Pepsi bottles with new and old logos are seen at a supermarket in Las Vegas, United States, November 17, 2023.
Jakub Porzycki | Nurphoto | Getty Images
PepsiCo reported mixed quarterly results on Thursday, hurt by falling demand for its beverages and snacks in North America.
The company also narrowed its full-year revenue outlook. Pepsi now expects organic revenue growth of about 4%, a more cautious outlook than its previous forecast of at least 4%. The company reiterated its guidance for constant-currency earnings growth of at least 8%.
“When we say at least 4[%]”We were talking more about about 5% in our minds,” CEO Ramon Laguarta told analysts on the company’s earnings call. “Now we’re talking about about 4… it’s specifically related to the consumer in the U.S.”
The company’s shares fell more than 1% in early trading.
Here’s what PepsiCo reported for the quarter ended June 15, compared with what Wall Street expected, based on a survey of analysts conducted by LSEG:
- Earnings per share: $2.28 adjusted vs. $2.16 expected
- Revenue: $22.5 billion vs. $22.57 billion expected
Pepsi reported second-quarter net income attributable to the company of $3.08 billion, or $2.23 per share, up from $2.75 billion, or $1.99 per share, a year earlier.
Excluding items, the company earned $2.28 per share.
Net sales rose nearly 1 percent to $22.5 billion. The company’s organic revenue, which excludes acquisitions, divestitures and currency changes, rose 1.9 percent in the quarter, driven by Pepsi’s international business.
But the company faced difficulties in its domestic market, hurt by product recalls and reduced demand for its products.
Executives said in prepared remarks that consumers have become more value conscious. After several years of price increases, buyers are resisting buying fewer bags of chips or switching to cheaper store-brand options. Previously, Pepsi executives said that lower-income consumers have struggled the most, but Laguarta said on Thursday’s conference call that consumers at all income levels are changing their purchasing behavior.
Frito-Lay North America’s volume fell 4%, while Pepsi’s North American beverage unit saw volume shrink 3%. The metric strips out price and currency changes to reflect demand.
Executives said Pepsi’s beverage volume in North America improved sequentially, signaling that its attempts to re-engage consumers are starting to work. The company is betting on higher-margin packaging and products, as well as in-store promotions for its biggest brands, to attract budget-conscious consumers, particularly Frito-Lay brands, which include Cheetos and Doritos.
“We have signs that we are seeing positive results in some of the activities we are carrying out, and the 4th of July was a very strong day for us,” said Laguarta.
Quaker Foods North America saw its volume fall 17% in the quarter as the division continues to deal with the fallout from recalls for potential salmonella contamination issued in December and January. Pepsi expects the segment’s volume to improve in the second half of the year.