Macroeconomic headwinds did not slim down the third quarter results of PepsiCo Inc
Earlier this summer, PepsiCo rival, Coca Cola
Fiscal Third Quarter Highlights
For the quarter ended in September, the packaged foods and beverage maker reported revenue grew 6.7% to $23.45 billion, topping LSEG's estimate of $23.39 billion, while organic revenue that excludes the impact of acquisitions and divestitures, rose 8.8%. PepsiCo made a net income of $3.09 billion, or $2.24 per share. Adjusted earnings amounted to $2.25, also topping the expected $2.15.
Yet, PepsiCo's volume, which strips out pricing and currency changes, fell again this quarter as inflation harmed product demand. In response, Pepsi has been shrinking portions and making smaller value packs to provide consumers with more affordable options. During the quarter, Pepsi executed price increases of about 11%.
Food Performed Better Than Beverages
North American food divisions outperformed the beverages unit that contracted 6%. In North America, Quaker Foods experienced a 1% volume rise as its brands gained market share in key categories, while Frito-Lay's volume was flat.
2024 Outlook
Organic revenue growth has been guided at the high end of 4% to 6% with core constant currency earnings per share growing in high single digits.
Consumers Digested Higher Prices Of Snacks
Pepsi reported added another successful round of price increases to its solid organic sales growth, allowing to drinks and snacks giant to lift its full year profit forecast for the third consecutive quarter.
The Threat Of Weight Loss Drugs
Last Thursday, shares of both PepsiCo and Coca Cola got smashed when Walmart Inc
Although the Walmart executive spoke mainly of a changing consumer behavior in terms of the changes in customers' baskets, these drugs reduce appetite and cravings, therefore altering the physiology that goes on within the body and possibly even eliminate the need for snacks altogether. Considering that about 45% of the U.S. population is deemed as obese with as much as 70% categorized as overweight, the weight loss craze will undoubtedly have a profound impact on PepsiCo and Coca Cola, as well as Walmart, as they will all be forced to alter their offerings to fit their consumers.
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