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PepsiCo (NASDAQ:PEP) traded lower early on Friday, after falling short of consensus estimates with its fourth-quarter earnings report.
The beverage giant reported that organic sales increased 4.5% during the quarter versus an expected 5.9%. Total revenue fell 0.5% year-over-year during the quarter to $27.9 billion versus $27.4 billion consent. Volume fell 3% in the convenience food sector and 2% in the beverage sector. The largest decline by segment was the 8% decline for Quaker Foods North America.
Operating profit decreased 27% for the PepsiCo North America segment primarily reflecting certain operating cost increases, a 37 percentage point impact of current year impairment charges related to our investment in Tropicana Brands Group, a decrease in organic volume, a 22% drop in point impact of rising raw material costs, mainly sweeteners, and a 6 percentage point unfavorable impact of the 53rd reporting week of the previous year. These impacts were partially offset by effective net prices, productivity savings, a favorable impact of 7 percentage points resulting from lower restructuring charges and lower advertising and marketing expenses.
Operating profit improved slightly for the Europe segment and the Frito-Lay North America segment compared to a year ago.
CEO Outlook: “We are confident that our businesses will perform well in 2024 amid changing market conditions. Category growth rates are normalizing as consumer behaviors largely return to pre-pandemic levels and fulfillment of net revenues moderate as inflationary pressures are expected to ease Going forward, we will further strengthen our focus on providing consumers with great-tasting products that offer convenience and compelling value. We will also aggressively manage our costs to accelerate productivity and we will invest more in our brands, innovation, channel expansion and pep+ transformation.”
In terms of guidance, PepsiCo (PEP) expects full-year organic revenue growth of 4% and at least 8% core constant currency EPS growth. Both indicative values were lower than analysts’ expectations.
Shares of PepsiCo (PEP) fell 2.10% in premarket trading on Friday. Coca-Cola rival warehouse (KO). 0.60% in the first session.