PepsiCo (PEP.O) fell short of analysts’ revenue estimates for the quarter and projected subdued organic growth for 2024 due to increased prices impacting demand for its beverages and Lay’s crisps. The announcement caused a 2% drop in its shares before Friday’s opening bell.
In the fourth quarter, the soda and snacks giant reported a 0.5% decline in net revenue to $27.85 billion, below analysts’ expectations of a 1.4% increase to $28.40 billion. PepsiCo has faced challenges from frequent price hikes implemented since the pandemic to offset rising costs from supply chain disruptions.
Data from YipitData revealed an 8% decline in units sold by PepsiCo’s beverage business in the U.S. in November, with further declines of 7% in October and December. Carrefour (CARR.PA), Europe’s largest food retailer, announced in January that it would not stock PepsiCo’s brands due to “unacceptable price increases.”
PepsiCo anticipates annual organic revenue growth of at least 4%, contrasting with the 9.5% growth reported for fiscal 2023. Despite a 9% increase in average prices in the quarter ending Dec. 30, organic volume slipped by 4%.
CEO Ramon Laguarta acknowledged the normalization of category growth rates as consumer behaviors revert to pre-pandemic norms. However, he expressed optimism, noting that PepsiCo surpassed fourth-quarter profit expectations and projected annual core profit slightly above estimates, relying on expected reductions in input and freight costs.
The company forecasts fiscal 2024 core earnings per share of $8.15, slightly higher than analysts’ expectations of $8.14. Additionally, PepsiCo announced an annualized dividend of $5.42 per share, up from $5.06.
Adjusted earnings per share for the quarter were $1.78, surpassing estimates of $1.72. Despite revenue challenges, PepsiCo remains optimistic about its financial outlook for the coming year.
