PepsiCo released its first quarter earnings for the calendar year 2024, with better-than-expected revenue during the period on strong international demand for its snacks and beverages. It, however, witnessed a slowdown in the United States. It posted net revenue for the quarter at $18,250 million, up 2.3 per cent as against $17,846 million during the same period last year. Organic revenue growth was 2.7 per cent. GAAP net income increased 6 per cent to $2 billion, or $1.48 per share. Core EPS grew 7 per cent to $1.61.
Operating profit for the first quarter of 2024 stood at $2,717 million, rising from $2,629 million during the first quarter of the previous year.
“During the first quarter, our businesses remained agile and performed well, with a strong performance from our International business. We delivered a sequential improvement in our volume trends, and year-over-year growth in our net revenue, operating profit margin and EPS – despite the impact of certain product recalls at Quaker Foods North America and a difficult net revenue growth comparison from the prior year,” said Chairman and CEO Ramon Laguarta. The recall in the quarter of Quaker Oats cereal, bars and snacks was because of potential contamination with salmonella.
Quaker Foods North America net revenue dropped by 23.7 per cent during the quarter to $593 million from the previous year’s $777 million. Frito-Lay North America net revenue came in at $5,676 million, up 1.7 per cent from $5,583 million. PepsiCo Beverages North America posted the first quarter revenue at $5,874 million and the Latin America revenue came in at $2,067 million. While Africa, Middle East and South Asia market posted revenue at $1,040 million; Asia Pacific, Australia and New Zealand and China Region recorded revenue at $1,064 million.
Company guidance and outlook
Consistent with its previous guidance for 2024, PepsiCo continues to expect at least 4 per cent increase in organic revenue, and at least 8 per cent increase in core constant currency EPS. It said that it is expecting a core annual effective tax rate of 20 per cent. It further said that the total cash returns to shareholders is estimated at approximately $8.2 billion, consisting of dividends of $7.2 billion and share repurchases of $1.0 billion. PepsiCo provides guidance on a non-GAAP basis.
In addition, the company continues to expect an approximate 1-percentage-point foreign exchange translation headwind to impact reported net revenue and core EPS growth based on current market consensus rates. “This assumption and the guidance above imply 2024 core EPS of at least $8.15, a 7 per cent increase compared to 2023 core EPS of $7.62,” it said.
Ramon Laguarta said, “As we look ahead, we will continue to focus our efforts on executing well in the marketplace and delivering great-tasting products that offer convenience and good value to the consumer. We will also continue to elevate and accelerate our productivity initiatives to support continued investments in our brands, capabilities and pep+ initiatives. As a result, we continue to expect to deliver at least 4 per cent organic revenue growth and at least 8 per cent core constant currency EPS growth in 2024. In addition, our previously announced 7 per cent annualized dividend increase is expected to begin with our June 2024 payment and will represent our 52nd consecutive annual increase.”