PepsiCo lowers 2024 revenue forecast after disappointing sales in second straight quarter

New York: PepsiCo has revised its full-year forecast for organic revenue growth downward after reporting weaker-than-expected sales for the second consecutive quarter. As per reports, the company's performance was impacted by product recalls from Quaker Foods North America, declining demand in the U.S., and disruptions in some international markets.

For 2024, PepsiCo now anticipates a low-single-digit rise in organic revenue, down from its previous estimate of 4 percent growth. However, the company maintained its projection of at least 8 percent growth in core constant currency earnings per share. PepsiCo's shares dipped slightly, by less than 1 percent, in premarket trading.

PepsiCo reported a third-quarter net income of 2.93 billion dollars, or 2.13 dollars per share, a decline from the 3.09 billion dollars, or 2.24 dollars per share, posted a year ago. Excluding certain items, earnings were 2.31dollars per share. Revenue dropped 0.6 percent to 23.32 billion dollars, while organic revenue, which excludes acquisitions, divestitures, and currency fluctuations, increased by 1.3 percent.

The company saw a 2 percent drop in volume for both its food and beverage divisions, with demand softening across North America. U.S. consumers have become more cautious, purchasing fewer snacks and making fewer trips to convenience stores. PepsiCo's Mexican sales also slowed, which CEO Laguarta attributed partly to the country’s June election.

Whereas, Quaker Foods North America experienced the sharpest decline in volume, with a 13 percent drop, following a series of recalls linked to potential salmonella contamination. While the recalls and the subsequent closure of a plant have weighed on PepsiCo's results, Laguarta and CFO Jamie Caulfield indicated that the impact is now diminishing.

PepsiCo is also expanding its portfolio to attract health-conscious consumers.

According to reports, last week, it announced the 1.2 billion dollars acquisition of Siete Foods, a brand that specialises in Mexican-American foods with a focus on dietary accommodations.

In PepsiCo's North American beverage segment, volume fell 3 percent, with brands like Gatorade and Pepsi seeing revenue growth, but energy drinks, including Pepsi’s Rockstar, struggling as convenience store traffic declines.