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PepsiCo reported mixed quarterly results as North American demand for its food and drinks weakened. CEO Ramon Laguarta said that U.S. sales broadly slowed down in the fourth quarter, partly due to pricing and consumers’ disposable income situation.
US consumers are also shifting their behavior from eating and drinking at home to picking up more snacks and Gatorade from convenience stores. However, he expressed optimism about the overall state of the consumer, citing low unemployment and hopes that interest rates will fall by the summer and wages will rise faster than inflation.
Pepsi reported fourth-quarter net income of $1.3 billion, or 94 cents per share, up from $518 million, or 37 cents per share, a year earlier.
The food and beverage giant earned $1.78 per share. Net sales dropped less than 1% to $27.85 billion. It is the first quarter since 2020 that the company’s quarterly revenue has declined compared with the year-ago period. Currency exchange rates dragged net sales down by 1.5%.
Pepsi’s organic revenue rose 4.5% in the quarter, helped by higher prices, but those same raised prices have hurt demand for the company’s food and drinks. Pepsi’s North American Quaker Foods division reported an 8% decline in volume. A voluntary recall of its granola bars and cereals hurt its sales during the quarter, along with weaker growth for the overall category.
For 2024, Pepsi now anticipates organic revenue will rise at least 4% and core constant currency earnings per share will climb at least 8%. The company previously forecast an increase in organic revenue on the high end of 4% to 6% and core constant currency earnings per share growth in the high single digits.
