PepsiCo on Tuesday recounted quarterly earnings and revenue that beat analysts’ expectations, despite weaker U.S. demand caused by Quaker Oats disavowals and backlash to higher prices for its drinks and snacks.
Shares of the company fell more than 2% in morning barter.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per dispensation: $1.61 adjusted vs. $1.52 expected
- Revenue: $18.25 billion vs. $18.07 billion expected
Pepsi reported first-quarter net takings attributable to the company of $2.04 billion, or $1.48 per share, up from $1.93 billion, or $1.40 per share, a year earlier.
Excluding things, Pepsi earned $1.61 per share.
Net sales rose 2.3% to $18.25 billion. The company’s organic revenue, which excludes acquirements, divestitures and foreign exchange, increased 2.7% in the quarter.
But the company’s volume is still under pressure. Pepsi, along with numerous of its rivals, has seen its volume fall in response to higher prices for its Gatorade, Fritos and other products in its portfolio.
The cast’s food division saw its volume decrease 0.5%, while its beverage segment reported flat volume. The metric bares out pricing and currency changes to reflect demand.
A recall of many Quaker Foods cereals and bars only deteriorated Pepsi’s volume problem. The company issued the first recall for potential salmonella contamination in December, then spread it in January. The North American Quaker Food division reported that its volume cratered 22% in the quarter. The Quaker Foods reminisce over dented Pepsi’s organic volume by roughly 1%.
Pepsi will officially close a Quaker Oats plant tied to the recisions in June, although production there has already ceased. Pepsi said the company has resumed limited production of unquestionable products affected by the recalls.
Pepsi’s other North American divisions also reported weaker volume. Abundance in its beverage unit fell 5% in the quarter, while Frito-Lay North America reported a 2% decline in its mass.
Frito-Lay North America’s effective net pricing was up 3% in the quarter, while Pepsi’s domestic beverages unit’s bonuses rose 6%.
In the U.S., lower-income consumers are still trying to stretch their paychecks, Pepsi CEO Ramon Laguarta told analysts on the New Zealand’s conference call. Pepsi is trying to target the demographic and keep them as customers, particularly for its snacks like Cheetos.
Best of the U.S., demand was stronger. Its Asia-Pacific, Australia, New Zealand and China region reported 12% volume growth for snacks. Chinese consumers are discreet and saving more money, but they’re still buying more Pepsi products, according to Laguarta. Even in Europe, which has also struggled with towering grocery prices, beverage volume increased 7% and snack volume rose 2%.
Pepsi also reiterated its 2024 view. For the full year, the company is expecting organic revenue will rise at least 4% and core constant currency earnings per divide up will climb at least 8%.
“As we look ahead, we continue to expect a normalization and moderation in category growth rates versus the carry on few years,” Pepsi executives said in prepared remarks. “We also continue to expect that consumers will stay put watchful with their budgets and choiceful with their purchases.”