PepsiCo posted a surprise drop in third-quarter revenue and cut its forecast for annual sales growth, as cautious consumer spending in North America weighs on demand for its sodas and Frito-Lay snacks.
Shares of the company fell about 1% in premarket trading.
The packaged food giant expects fiscal 2024 organic sales to grow in a low single-digit range. It had previously forecast a 4% rise.
Quarterly Highlights
Quarterly revenue was hurt by subdued trends in North America, fallout from product recalls in Quaker Foods business earlier this year and business disruptions due to rising geopolitical tensions in certain international markets, CEO Ramon Laguarta said.
Quaker Foods North America segment saw organic revenue slump 13% during the quarter, following an 18% decline in the second quarter.
Net revenue came in at $23.32 billion (€21.23 billion) in the quarter ended 7 September from $23.45 billion (€21.34 billion) last year.
Analysts estimated a 1.3% jump in revenue to $23.76 billion (€21.63 billion), according to data compiled by LSEG.
'Stimulate Consumer Demand'
Chair and CEO Ramon Laguarta added, “For the balance of the year, we will continue to invest in commercial activities and brand support to stimulate consumer demand. Our investments will be enabled by elevating and advancing productivity initiatives across our entire organisation.
“We continue to expect to deliver at least 8% core constant currency EPS growth as we will focus on tightly managing our costs to better align with the subdued growth environment that we are currently operating in.”
Recently, PepsiCo announced plans to buy tortilla-chip maker Siete Foods for $1.2 billion (€1.09 billion) as it beefs up its portfolio amid a shift among cost-conscious consumers to private-label brands.
News by Reuters, additional reporting by ESM.
