PepsiCo Cuts Annual Sales Growth Forecast

By Savyata Mishra

PepsiCo has lowered its forecast for annual sales growth, expecting low single-digit organic sales growth for fiscal 2024, down from a previous estimate of 4%.

CEO Ramon Laguarta cited inflationary pressures and higher borrowing costs affecting consumer budgets. Consumers are opting for cheaper private-label brands, smaller portions, and shopping more at mass retailers.

The company also faced a surprise revenue drop in Q3, partly due to a Quaker Foods product recall linked to salmonella contamination. International markets, which had previously supported North American business, are now experiencing volume slowdowns.

Quaker Foods North America saw a 13% drop in organic revenue this quarter, following an 18% decline the previous quarter. However, price increases and operational efficiencies led to a marginal growth in profits.

PepsiCo reported adjusted earnings of $2.31 per share, beating estimates of $2.29. Net revenue fell 0.6% year-over-year to $23.32 billion, missing analysts' projections of a 1.3% increase. Shares declined about 1% in premarket trading.