PepsiCo Inc
The company reported a third-quarter net revenue decline of 0.6% year-over-year to $23.319 billion and organic growth of 1.3%, missing the consensus estimate of $23.825 billion.
The gross margin expanded by 94 bps to 55.4% for the quarter, and the operating margin contracted by 51 bps to 16.6%.
Net revenue from Frito-Lay North America decreased 1% year over year, Quaker Foods North America dropped 13%, and PepsiCo Beverages North America was flat.
Latin America sales fell 5% YoY, Europe sales rose 7%, Africa, Middle East and South Asia down 4%, and Asia Pacific, Australia and New Zealand and China sales declined 2%.
The company held $7.3 billion in cash and equivalents as of September 7. Operating cash flow for the nine months totaled $6.22 billion, compared to $7.63 billion in 2023.
Adjusted EPS of $2.31 beat the consensus estimate of $2.29.
Chairman and CEO Ramon Laguarta noted that the company's businesses stayed resilient in the third quarter despite challenges from North American recalls, geopolitical tensions, and weak category trends. Strong cost controls boosted profitability alongside investments to improve competitiveness.
Laguarta commented, "Given our performance to date and our outlook for the fourth quarter, we now expect to deliver a low single-digit increase in organic revenue (previously approximately 4 percent organic revenue growth). We continue to expect to deliver at least 8 percent 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."
2024 Outlook: PepsiCo expects a low-single-digit increase in organic revenue (previously ~4%) and continues to expect at least an 8% increase in core constant currency EPS.
PepsiCo's assumption and guidance imply that 2024 adjusted EPS of at least $8.15 (consensus $8.15) will be a 7% increase year over year.
The company continues to expect total cash returns to shareholders to be approximately $8.2 billion, consisting of dividends of $7.2 billion and share repurchases of $1.0 billion.
Price Action: PEP shares are trading lower by 1.18% at $165.24 premarket at the last check Tuesday.