PepsiCo Surpasses Wall Street Forecasts with Strong International Sales Amidst U.S. Slowdown

Despite these positive developments, PepsiCo's shares fell by 1.5%, even as the company maintained its fiscal 2024 forecasts.

PepsiCo exceeded Wall Street forecasts for revenue and earnings in the first quarter, driven by strong international demand for its beverages and snacks, even as the U.S. market experienced a slowdown.

The company reported significant sales in regions like Europe, Asia Pacific, and China, where consumers were willing to pay higher prices for PepsiCo products.

However, in the U.S., financial constraints led to a decrease in spending on these items.

PepsiCo CFO Jamie Caulfield commented on the economic conditions affecting consumers: “We’ve had three years of … massive consumer inflation and that has to be absorbed and I think the cumulative impact of that put a bit of strain on the consumer.

“But we expect that to abate as time goes on.”

The company saw a 5% increase in average prices during the quarter, though organic volume dropped by 2%, an improvement from the 4% decline in the previous quarter.

Internationally, PepsiCo’s operations contributed approximately 40% of its fiscal 2023 revenue, with the remainder coming from North America.

Under the leadership of CEO Ramon Laguarta, PepsiCo has been diversifying its offerings in both developed and emerging markets.

New products include flavored Quaker instant oats and Celsius energy drinks.

Despite these positive developments, PepsiCo’s shares fell by 1.5%, even as the company maintained its fiscal 2024 forecasts.

The North America beverage segment, PepsiCo’s largest unit, saw a modest 1% increase in sales, though organic volume decreased by 5%.

Meanwhile, sales at Quaker Foods North America dropped 24% due to product recalls initiated in December in the U.S. following a potential salmonella contamination.

PepsiCo anticipates a recovery in its North American operations as the effects of these recalls lessen.

The company’s net revenue for the quarter grew 2.3% to $18.25 billion, surpassing the London Stock Exchange Group’s (LSEG) estimates of $18.07 billion.

Additionally, PepsiCo’s core earnings per share of $1.61 exceeded the expected $1.52.

Analyst Gerald Pascarelli of Wedbush noted, “This is going to be another year of price-led revenue growth even though pricing has come down.”