Beverage and food giant PepsiCo reported mixed quarterly results on Friday, with earnings topping estimates but quarterly revenue sliding for the first time in nearly four years. The company’s shares fell more than 2% in premarket trading.
PepsiCo reported fourth-quarter net income of $1.3 billion, or 94 cents per share, up from $518 million, or 37 cents per share, a year earlier. Excluding items, the company earned $1.78 per share, beating estimates of $1.71 per share, according to a survey of analysts by Refinitiv.
However, net sales dropped 0.5% to $27.85 billion, missing estimates of $28.02 billion. It’s the first quarter since 2020 that the company’s quarterly revenue has declined compared with the year-ago period. Currency exchange rates dragged net sales down by 1.5%.
Pepsi’s organic revenue, which excludes acquisitions and divestitures, rose 4.5% in the quarter, helped by higher prices. But those same raised prices have hurt demand for the company’s food and drinks. Pepsi’s volume, which strips out pricing and currency changes, slid again this quarter.
PepsiCo executives said high borrowing costs and lower personal savings have squeezed consumers’ budgets, particularly in North America, in prepared remarks released ahead of the company’s conference call. They also said consumers are increasingly choosing smaller pack sizes for convenience and their low price points.
Pepsi’s North American Quaker Foods division reported an 8% decline in volume. A voluntary recall of its granola bars and cereals hurt its sales during the quarter, along with weaker growth for the overall category. Frito-Lay North America, which includes brands like Cheetos and Doritos, posted a 2% drop in volume. Pepsi’s North American beverage unit saw its volume fall 6% in the quarter.
For 2024, Pepsi now anticipates organic revenue growth of at least 4% and core constant currency earnings per share growth of at least 8%. The company previously forecast organic revenue growth on the high end of 4% to 6% and core constant currency earnings per share growth in the high single digits.
“Consumers are likely to remain watchful with their budgets and choiceful with their purchases,” Pepsi executives said in the prepared remarks.