PepsiCo cuts revenue outlook again

PepsiCo cut its annual organic revenue guidance again on Tuesday as it highlighted a "subdued" performance in North America in the third quarter.

The drinks company now expects organic revenue to rise by a low single digit in FY24, down from a previous forecast of approximately 4% revenue growth. It continues to expect at least an 8% increase in core constant currency earnings per share.

For the third quarter, PepsiCo reported net income attributable to shareholders of $2.93bn, down from $3.09bn in the same period a year earlier. Meanwhile, net revenue declined by 0.6% to $23.3bn.

Chairman and chief executive Ramon Laguarta said: "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. Strong cost controls aided our profitability, as we made incremental investments to improve our marketplace competitiveness.

"For the balance of the year, we will continue to invest in commercial activities and brand support to stimulate consumer demand. Our investments will be enabled by elevating and advancing productivity initiatives across our entire organisation."

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "Pepsi issued its second downgrade to revenue guidance in as many quarters this year as price hikes have become increasingly difficult for consumers to stomach. Volumes of both food and drink were down this quarter, as consumers chose to leave blockbuster brands like Pepsi, 7up and Lays Crisps on the shelves.

"Recalls of certain Quaker Oats products, following concerns that they could be contaminated with salmonella bacteria, continue to weigh on performance. And rising geopolitical tensions in certain international markets have also caused unwanted disruptions to operations."