Global beverage and snack leader, PepsiCo, has revised its sales forecast for 2024, citing sluggish performance in its North American and international markets during the third quarter. The company now anticipates a low-single-digit increase in organic revenue growth, down from its initial 4% projection.
Despite posting adjusted earnings of $2.31 per share, slightly above analyst expectations, revenue fell short of estimates, reaching $23.3 billion compared to the anticipated $23.8 billion. The company’s stock price dipped 1% in pre-market trading following the announcement.
Analysts attribute the revised outlook to ongoing challenges in North America, which were partially offset by strong margin and productivity performance. PepsiCo reiterated its expectation of at least an 8% increase in core constant currency earnings per share, a testament to its operating model’s resilience in a tough macroeconomic environment.
Chairman and CEO Ramon Laguarta attributed the company’s third-quarter performance to subdued category trends in North America, product recalls, and business disruptions caused by rising geopolitical tensions in certain international markets. In an interview, Laguarta noted that consumers are making significant trade-offs due to economic pressures, which are disproportionately affecting the snacks business.
To combat these challenges, PepsiCo plans to invest in commercial activities and brand support to stimulate consumer demand. The company has also made efforts to offer more value to consumers and improve in-store availability, resulting in an improving volume performance trend.
PepsiCo’s snack business, Frito-Lay, saw a 1.5% volume decline in the quarter, while its healthier alternative brands, such as SunChips and PopCorners, are experiencing growth. The company has also announced plans to acquire Siete Foods, a Mexican-American meal and snack brand, for $1.2 billion.
In the face of ongoing inflationary pressures and higher borrowing costs, PepsiCo remains committed to delivering value to consumers and driving growth through strategic investments and brand support.
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