PepsiCo reported quarterly earnings and revenue that surpassed analysts' expectations, driven primarily by international growth, while its North American business continued to underperform [1]. For the fiscal third quarter, PepsiCo posted adjusted earnings per share of $2.34, exceeding the expected $2.29, and revenue of $25.27 billion, above the anticipated $24.96 billion [1]. Net income attributable to the company was $3.05 billion, or $2.23 per share, compared to $2.6 billion, or $1.90 per share, a year earlier [1]. Net sales increased by 5.6% to $25.27 billion, and organic revenue grew by 3.1% during the quarter [1]. Beverage volume rose 3%, and food volume increased 1% globally, with international markets accounting for 41% of net revenue so far this year, according to CEO Ramon Laguarta [1].
Despite these positive results, PepsiCo lowered its full-year earnings forecast, now expecting core earnings per share to increase 2.5% to 3.5%, down from the previous projection of the low end of a 5% to 7% range [1]. The company now anticipates net revenue growth of about 6%, at the high end of its prior 4% to 6% outlook [1]. The North American beverage unit saw a 2% decline in volume, and the North American food division reported flat volume, highlighting ongoing challenges in the domestic market [1]. CEO Ramon Laguarta described North America's performance as below expectations and a significant opportunity for improvement [1]. CFO Steve Schmitt noted that the turnaround in North America is progressing more slowly than anticipated, with current strategies focusing on innovation and increased advertising and marketing [1].
Internationally, PepsiCo experienced volume growth in all but one business unit, with only the convenient foods division in Europe, the Middle East, and Africa reporting a 1% decline in volume [1]. In the U.S., PepsiCo reduced snack prices by up to 15% in February, aiming to boost demand among budget-conscious consumers, a move that CEO Laguarta said has paid off [1].
Shares of PepsiCo rose about 2% in morning trading following the earnings announcement, indicating a moderately positive market reaction despite the lowered outlook [1].
CONCLUSION
PepsiCo delivered better-than-expected third-quarter results, but persistent weakness in North America led the company to lower its full-year earnings forecast. While international growth remains strong and recent pricing strategies have shown some success, the slower-than-expected domestic turnaround continues to weigh on overall performance.