USA – PepsiCo, an American multinational snacks company, has disclosed its full-year results, reporting net revenue growth of 5.9% to US$91.47 billion.
The company encountered some difficulties as its net revenue recorded a 0.5% decline to US$27.85 billion, which marked the first drop in 14 quarters.
PepsiCo attributed this decline to the consumers’ resistance to higher prices for sodas and snacks. This resistance was caused by the increased production costs.
Executives cited factors such as high borrowing costs and reduced personal savings as contributors to the decrease in consumer spending.
The company experienced a notable drop in demand, particularly in the U.S. market. Organic revenue growth slowed to 4.5%, down from 10.6% in the previous year.
PepsiCo’s fourth-quarter net income reached US$1.3 billion, a significant rise from US$518 million in the same period the previous year. The boost in earnings was tempered by impairment charges related to brands like SodaStream and Goodwill.
Ramon Laguarta, CEO of PepsiCo, explained the challenges faced within Quaker Foods North America, noting a 19% decline in operating profit to US$492 million.
“We had a food safety incident in our Quaker supply chain in the US that has impacted us in November, December, and it will continue to impact us, I think, for at least the first half of the year until we recover our supply chain to normality,” said Ramon.
On a more positive note, Frito-Lay North America reported a 10% increase in operating profit to US$6.78 billion for the fiscal year. Key brands like Cheetos, Doritos, and Fritos led the way with double-digit net revenue growth.
However, PepsiCo Beverages North America saw a 52 percent decline in operating profit to US$2.25 billion, driven by prior-year gains associated with brand sales and 2023 impairment charges.
Despite the challenges, Laguarta expressed confidence in PepsiCo’s performance in 2024, stating, “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.”
Looking forward, PepsiCo plans to aggressively manage costs while emphasizing productivity acceleration. The company also intends to increase investments in its brands, innovation, channel expansion, and its PepsiCo Positive ESG transformation strategy.
For 2024, PepsiCo anticipates organic revenue growth of at least 4%, with core constant currency earnings per share set to climb at least 8%, aligning with the company’s commitment to sustained growth and resilience.
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