PepsiCo on Tuesday reported a surprise drop in third-quarter revenue and cut its annual sales growth forecast, as it grapples with cautious consumer spending in North America and the fallout from a Quaker Foods product recall.
The packaged foods giant expects fiscal 2024 organic sales to grow in the low single digits range. It had previously forecast a 4% increase.
Quarterly revenue was impacted by muted trends in North America, the impact of Quaker recalls earlier this year and business disruptions due to rising geopolitical tensions in certain international markets, CEO Ramon Laguarta said. .
Organic revenue in the Quaker Foods North America segment fell 13% during the quarter, following an 18% decline in the second quarter.
However, price increases and measures to drive efficiency across its operations helped drive 111 basis point (bp) growth in margins.
It also earned $2.31 per share on an adjusted basis, beating estimates of $2.29 per share, according to data compiled by LSEG.
“We continue to expect to achieve constant currency EPS growth of at least 8 percent as we will focus on closely managing our costs to better align with the moderate growth environment in which we currently operate,” Laguarta added.
Net income fell 0.6% to $23.32 billion in the quarter ended Sept. 7, from $23.45 billion a year ago. Analysts estimated a 1.3% increase to $23.76 billion.
The company’s shares fell about 1% in premarket trading.
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