PepsiCo Reports $27.85 Billion Sales in Fourth Quarter

PepsiCo announced on Friday mixed quarterly results due to weak demand for food and beverages in North America.

The company’s shares fell more than 2% in pre-market trading.

PepsiCo reported a net income of $1.3 billion, or 94 cents per share, for the fourth quarter, compared to $518 million, or 37 cents per share, in the previous year. Excluding items, the food and beverage giant earned $1.78 per share.

Net sales decreased by 0.5% to $27.85 billion, with currency exchange rates causing a 1.5% drop. Organic revenues, excluding acquisitions and divestitures, increased by 4.5% in this quarter thanks to price increases, but these same higher prices hurt the demand for the company’s food and beverages.

PepsiCo’s volume, excluding prices and currency changes, declined again during this quarter. “Rising borrowing costs and decreased personal savings have put pressure on consumer budgets, especially in North America,” said PepsiCo executives. They also stated that “consumers are increasingly choosing smaller packaging sizes for convenience and lower price points.”

PepsiCo’s North American food division reported an 8% decrease in volume, with the voluntary recall of granola bars and cereals harming sales in this quarter, along with weak growth in the overall category.

Frito-Lay North America, which includes brands like “Cheetos” and “Doritos,” saw a 2% decrease in volume, and PepsiCo’s North American beverage unit experienced a 6% decline in volume during this quarter.

For 2024, the company expects at least a 4% growth in organic revenues and at least an 8% growth in basic earnings per share.

The company previously predicted a maximum growth in organic revenues of 4% to 6%, and high individual growth in basic earnings per share.

Executives at PepsiCo noted that consumers are likely to remain vigilant about their budgets and choose their purchases wisely.

PepsiCo anticipates that the first half of the year will be weaker, as product withdrawals have weakened their operations in North America for Quaker Oats, and international conflicts have affected sales in certain regions.

Executives predict that international organic revenue growth will surpass that of North America for the entire year.