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The
company's shares were down about 2% before the bell on Friday.
PepsiCo shielded its margins by passing on higher production
costs to its customers for almost two years, but now faces
slowing demand even for sodas and snacks tagged as "affordable
luxuries."
In January, Carrefour, Europe's largest food retailer, asserted
it would not be stocking PepsiCo's brands "due to unacceptable
price increases".
PepsiCo's fourth-quarter revenue fell 0.5% to $27.85 billion,
the first drop in 14 quarters. Analysts had expected a 1.4% rise
to $28.40 billion, according to LSEG data.
The number of units sold by the company's beverage business in
the U.S. fell 8% in November and was down 7% in October and
December, according to YipitData.
Average prices jumped 9% in the quarter ended Dec. 30, PepsiCo
said, while organic volume slipped 4%.
"The volumes again are not kind of performing...they are not
getting the improvement in tandem with the moderating levels of
pricing... that is likely going to be a headwind for them over
the near term," Wedbush analyst Gerald Pascarelli said.
The soda and snacks giant's forecast annual organic revenue
growth of at least 4%, compared to the 9.5% growth reported for
fiscal 2023.
"Category growth rates are normalizing as consumer behaviors
largely revert to pre-pandemic norms and net revenue realization
moderates as inflationary pressures are expected to abate," CEO
Ramon Laguarta said in a statement.
Still, PepsiCo beat fourth-quarter profit expectations and
forecast annual core profit slightly above estimates, betting on
easing input and freight costs.
PepsiCo expects fiscal 2024 core earnings per share of $8.15,
compared with expectations of $8.14 and announced a 7% increase
to its annual dividend.
Excluding items, the company earned $1.78 per share, beating
estimates of $1.72.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by
Sriraj Kalluvila)
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