PepsiCo forecasts slower revenue growth

The owner of Pepsi, Lay’s and Quaker, among others, posted a 0.5% decline in revenues in the three months to December end, to $27.9bn.

The slide surprised analysts who were expecting a 1.4% rise to $28.4bn.

Adjusted earnings per share came in at $1.78, however, ahead of forecasts for $1.72, as input and freight costs started to ease.

Organic revenues - which strip out the impact of acquisitions and divestitures - rose 4.5%.

But average prices rose 9% during the quarter, weighing on demand. The North American beverage unit reported a 6% fall in volumes, while Frito-Lay North America - which owns Doritos, Cheetos and other snack brands - dropped 2%.

As at 1245 GMT, shares in PepsiCo were down 1% in pre-market trading.

Chief executive Ramon Laguarta said: "We pleased with our results for 2023, as we successfully navigated another year of elevated levels of inflation, macroeconomic volatility, geopolitical tensions and international conflicts.

"We are confident that our businesses will perform well in 2024 in the context of changing marketplace conditions.

"Category growth rates are normalising as consumer behaviours largely revert to pre-pandemic norm and net revenue realisation moderates as inflation pressures are expected to abate."

PepsiCo forecast organic revenue growth of at least 4% in 2024, and core constant currency earnings per share growth of at least 8%.

That compares to previous forecasts for organic revenue growth between 4% and 6%, and EPS growth in the high single digits. Organic revenues grew by 9.5% in 2023 to $91.5bn.