PepsiCo experienced a slight decline in revenue during the fourth quarter as consumers in North America reduced their purchases of Frito-Lay snacks and beverages.
The company, based in Purchase, New York, announced on Tuesday that it generated revenue of $27.78 billion for the period covering October to December. This figure fell short of market expectations, which averaged around $27.89 billion according to analyst projections provided by FactSet.
As a result of these disappointing numbers, PepsiCo’s stock saw a dip of 2.6% in premarket trading on Tuesday.
In previous statements, PepsiCo has indicated that demand in North America was “subdued,” in part due to a significant recall of Quaker Oats granola bars and cereals. Additionally, it appears that consumers are either skipping snack purchases or opting for less expensive alternatives following a series of price hikes over the years.
The company noted a global net pricing increase of 3% for the fourth quarter. In an effort to make its snack offerings more accessible, PepsiCo has introduced several initiatives, such as enhanced promotions, providing more chips per bag, and launching mini canisters and value packs. The company is also expanding its Chester’s and Santitas value brands, which recorded impressive revenue growth last year.
On the beverage front, PepsiCo has invested more in marketing campaigns targeting successful products like Pepsi Zero Sugar, Propel, and Gatorade.
Globally, PepsiCo’s volumes for snack foods and beverages rose by 1% during the fourth quarter, with substantial growth found in regions such as Africa and Asia. However, sales in North America for both snacks and beverages faced a 3% decline.
Net income for the company increased by 17%, reaching $1.5 billion. When adjusted for one-time costs, PepsiCo reported earnings of $1.96 per share, exceeding analysts’ expectations by two cents.
Looking ahead, PepsiCo anticipates organic revenue growth to be in the low single digits for 2025. Organic revenue is a measure that accounts for fluctuations in foreign currency and changes resulting from acquisitions or divestitures. The company noted an organic revenue growth of 2% for the year 2024.
Following the closure of four bottling facilities in the United States last October, PepsiCo is set to persist with its multi-year plan aimed at boosting productivity, which includes the integration of additional automation in its manufacturing plants and warehouses.
