PepsiCo revenue outlook

PepsiCo now expects organic revenue growth of approximately 4%, a more cautious outlook than its previous forecast of at least 4%. The company reiterated its guidance for core constant currency earnings growth of at least 8%.

“When we’re saying at least 4[%], we were talking more about around 5% in our minds,” CEO Ramon Laguarta told analysts on the company’s conference call. “Now we’re talking around 4 … it’s related specifically to the consumer in the U.S.”

Analysts have said that product prices, which are starting to normalize after nearly two years of multiple hikes, are still higher than pre-pandemic levels, giving packaged-food companies such as PepsiCo little room to raise prices as volumes shrink.

PepsiCo Q2 earnings

Here’s what PepsiCo’s earnings for Q2 were compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

PepsiCo earnings per share: $2.28 adjusted vs. $2.16 expected

Revenue of PepsiCo: $22.5 billion vs. $22.57 billion expected

Pepsi posted Q2 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.

PepsiCo sales

Net sales rose nearly 1% to $22.5 billion. The company’s organic revenue, which excludes acquisitions, divestitures and currency changes, increased 1.9% for the quarter, fueled by Pepsi’s international business.

But the company struggled in its home market, hurt by product recalls and shrinking demand for its products.

Value conscious consumers

Executives said in prepared remarks that consumers have become more value conscious. After several years of price increases, shoppers are pushing back by buying fewer bags of chips or switching to cheaper private-label options. Previously, Pepsi’s executives had said that low-income consumers have been struggling the most, but Laguarta said on Thursday’s call that shoppers across all income levels are changing their shopping behavior.

Declining volume for PepsiCo

Frito-Lay North America’s volume declined 4%, while Pepsi’s North American beverage unit saw volume shrink 3%. The metric strips out pricing and currency changes to reflect demand.

Executives said volume for Pepsi’s North American drinks has improved sequentially, signaling that its attempts to lure back shoppers have begun working. The company is leaning on higher-margin packaging and products along with in-store promotions for its biggest brands to attract thrifty consumers, particularly for Frito-Lay brands, which include Cheetos and Doritos.

PepsiCo share price

PepsiCo share price was down as much as 3.4% to a nine-month low of $158.03 after it said it expected fiscal 2024 organic revenue to be about 4%, compared with prior expectations of at least 4%. PepsiCo share price fell more than 1% in early trading.

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