PepsiCo reported mixed fourth-quarter financial results on Tuesday, exceeding earnings expectations but missing revenue projections as demand for its snacks and beverages in North America continued to decline.
This marks the fifth consecutive quarter of reduced consumption in the region, leading to a 2% dip in the company’s shares during premarket trading.
The food and beverage giant posted adjusted earnings per share of $1.96, surpassing Wall Street’s expectation of $1.94. However, revenue came in at $27.78 billion, slightly below the anticipated $27.89 billion. Net income rose to $1.52 billion, or $1.11 per share, up from $1.3 billion, or $0.94 per share, a year earlier.
PepsiCo’s organic revenue, which excludes the impact of acquisitions, divestitures, and currency fluctuations, grew by 2.1% during the quarter. Globally, the company’s volume increased by 1% for both snacks and beverages.
Despite modest global gains, North American demand presented a significant challenge. Frito-Lay North America’s volume declined by 3%, as consumers faced budgetary constraints and reduced their spending on snacks. The beverage unit experienced a 3% volume drop, though Gatorade saw market share gains, and Mountain Dew Baja Blast achieved over $1 billion in annual sales.
Quaker Foods North America also struggled, with a 6% decline in volume, partly attributed to the lingering effects of a recall in December.
PepsiCo CEO Ramon Laguarta acknowledged the challenging market conditions but expressed optimism about the company’s future efforts.
“Looking ahead to 2025, we will continue to build upon the successful expansion of our international business while also taking actions to improve performance in North America,” he said in a statement.
Executives noted that North American performance is expected to gradually recover as promotional activities take effect and new products are introduced. The company also plans to invest in product innovation and marketing strategies to reignite consumer interest.
Economic headwinds, including years of elevated food prices and interest rates, have led many US consumers to cut back on discretionary spending. PepsiCo has responded by tapping into promotional activities and introducing smaller pack sizes to appeal to budget-conscious shoppers.
Looking forward, PepsiCo anticipates a low-single-digit increase in organic revenue and a mid-single-digit rise in core constant currency earnings per share for fiscal 2025. The company also announced a 5% dividend increase and plans for approximately $1 billion in share repurchases.
