PepsiCo tempered its full-year organic revenue growth outlook on Tuesday as the beverage and snacks company's third-quarter earnings beat Wall Street estimates while sales fell short of market expectations. The company now anticipates a low-single-digit rise in organic revenue for fiscal 2024, compared with its previous projection for growth of approximately 4%.
The revised guidance reflects the company's year-to-date performance, Chief Executive Ramon Laguarta stated. "We will focus on tightly managing our costs to better align with the subdued growth environment that we are currently operating in." The stock was down 0.5% in premarket activity. PepsiCo continues to expect full-year adjusted earnings per share of at least $8.15, while the current consensus on Capital IQ is for $8.14.
"For the balance of the year, we will continue to invest in commercial activities and brand support to stimulate consumer demand," according to Laguarta. For the three-month period ended Sept. 7, the company reported adjusted EPS of $2.31, up from $2.25 the year before and ahead of the Street's view for $2.29.
Revenue edged 0.6% lower to $23.32 billion, missing analysts' $23.78 billion estimate. Overall net pricing had a positive impact of 3% on the topline, while consolidated organic volume decreased 2%. Volume declined 2% in the company's convenient food business as well as in beverages. "Our businesses remained resilient in the third quarter, despite subdued category performance trends in North America, the continued impacts related to certain recalls at Quaker Foods North America and business disruptions due to rising geopolitical tensions in certain international markets," Laguarta commented.
"Strong cost controls aided our profitability, as we made incremental investments to improve our marketplace competitiveness." In North America, Quaker Foods' reported revenue declined 13%, but the company forecasts the business to improve in the fourth quarter, Laguarta and Chief Financial Officer Jamie Caulfield noted in prepared remarks published on the company's website.
Revenue in the beverages unit was flat. The Frito-Lay snack division, which includes trademark names such as Doritos, Cheetos, and Lays, logged a 1% decrease in revenue for the third quarter. Continuous inflationary pressures and high borrowing costs over the last few years weighed on consumer budgets and spending patterns, according to Laguarta and Caulfield.
Salty and savory snacks have underperformed so far this year, the executives added..