FX.co ★ Pepsico Updates FY24 Revenue Growth View After Q2 Beats Street; Stock Down

PepsiCo, Inc. shares fell approximately 2.4 percent in pre-market trading on the Nasdaq. Despite exceeding market expectations with higher profit and revenue in the second quarter, the company made a slight adjustment to its fiscal 2024 organic revenue growth outlook, though it maintained its forecast for annual core earnings growth.

Chairman and CEO Ramon Laguarta commented, "For the remainder of the year, we will further elevate and accelerate our productivity initiatives and make disciplined commercial investments to stimulate growth. These investments will focus on providing optimal value propositions within select segments of our North America convenient foods portfolio, enhancing our advertising and marketing efforts, and leveraging our go-to-market distribution capabilities for more precise marketplace execution."

For 2024, PepsiCo now anticipates approximately 4 percent organic revenue growth, revising its prior forecast of at least 4 percent. The company also continues to expect at least an 8 percent increase in core constant currency earnings per share.

PepsiCo projects an approximate 1-percentage-point foreign exchange translation headwind, impacting reported net revenue and core earnings per share growth based on current market consensus rates. Consequently, the 2024 core earnings per share are projected to be at least $8.15, marking a 7 percent increase compared to the 2023 core earnings per share of $7.62.

According to figures compiled by Thomson Reuters, analysts on average expect the company to earn $7.53 per share for the year, typically excluding special items.

In its second quarter, PepsiCo reported net income attributable of $3.08 billion or $2.23 per share, compared to $2.75 billion or $1.99 per share in the same quarter last year. Adjusted earnings for the period were $3.14 billion or $2.28 per share, up from $2.89 billion or $2.09 per share a year ago. Analysts had projected $1.99 per share.

The company’s quarterly revenue increased by 0.8 percent to $22.50 billion from $22.32 billion last year, surpassing the Street's expectations of $20.87 billion in revenues. Organic revenue growth was 1.9 percent.

During the second quarter, the business remained resilient despite facing challenging net revenue growth comparisons from the prior year, subdued category performance within North America's convenient foods sector, and certain product recalls at Quaker Foods North America.

Specifically, Frito-Lay North America revenues decreased by 0.5 percent to $5.87 billion, and Quaker Foods North America revenues dropped by 18 percent to $561 million. Conversely, PepsiCo Beverages North America grew by 1 percent to $6.81 billion, and Latin America revenues increased by 7 percent to $3.05 billion. Revenues in Europe rose by 2.5 percent and in Africa, the Middle East, and South Asia by 2 percent, while revenues in Asia Pacific, Australia and New Zealand, and the China Region declined by 2 percent.

In pre-market trading on the Nasdaq, PepsiCo shares were priced at $159.65, down by 2.41 percent.