PepsiCo forecast annual profit below expectations and missed quarterly revenue estimates on Tuesday as the Doritos maker faces weakening demand for its sodas and snacks in its largest market – the US.
Shares of PepsiCo fell 2% in premarket trading on Tuesday.
Americans are still paring back spending on soft drinks and salty treats to save money for essential purchases, forcing PepsiCo to tap promotions for volume growth after several quarters of slowdown brought on by price hikes.
The target is to offer multi-packs and mini canisters to bring back customers leaning towards smaller pack sizes or picking up cheaper alternatives from retail aisles.
PepsiCo also promised heavy investments into overhauling its existing products and introducing new items.
In the company’s prepared remarks, executives said, “We expect our North America performance to gradually improve as the year progresses, and our commercial activities take hold.”
PepsiCo’s North America beverages and Frito-Lay North America – its two biggest segments – reported a 3% volume decline in the fourth quarter.
The company’s total organic volume slipped 1% for the quarter ended 28 December, while average prices jumped 3%.
RBC Capital Markets analyst Nik Modi said, “Frito-Lay business is still finding its footing as elevated prices weigh on snacking trends… beverage business also continues to lose share, and we believe PepsiCo is reaching its pain threshold.”
PepsiCo expects a low-single-digit increase for fiscal 2025 core earnings per share, compared with analysts’ estimates of a 4.73% rise to $8.53 per share, according to data compiled by London Stock Exchange Group.
Its quarterly net revenue fell 0.2% to $27.78 billion, missing estimates of $27.89 billion.
Excluding items, PepsiCo earned $1.96 per share, above expectations of $1.94.
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