Pepsi Cuts Revenue Forecast As Sales Growth Weakens

PepsiCo has lowered its organic revenue forecast for the year as U.S. consumers continue to reduce purchases of its snacks and beverages, Dee-Ann Durbin reported for the Associated Press (AP).

PepsiCo's third-quarter revenue remained flat at $23.3 billion, falling short of Wall Street’s expectation of $23.8 billion. I Photo: Michael Filion Flickr

The company, headquartered in Purchase, New York, stated on Tuesday that it now anticipates its organic revenue — which is adjusted for foreign currency exchange and the effects of acquisitions or divestitures — to grow in the low single-digit range for the year, down from the previous projection of a 4% increase.

PepsiCo cited “subdued” performance in North America, impacted by a significant recall of its Quaker Oats granola bars and cereals, as well as weak demand for its Frito-Lay snacks and beverages.

Frito-Lay North America’s sales volumes declined by 1.5%, while North American beverage volumes dropped by 3%.

After years of price increases, consumers began resisting higher costs this summer, leading PepsiCo to lower prices on items like potato chips and tortilla chips. Frito-Lay prices rose only by 0.5% in the third quarter.

Globally, PepsiCo reported a 3% price increase. However, sales volumes fell in every market except Europe.

Third-quarter revenue remained flat at $23.3 billion, falling short of Wall Street’s expectation of $23.8 billion. PepsiCo's quarterly revenue growth, which had previously been in double digits, has slowed sharply in recent quarters.

Net income dropped by 5% to $2.9 billion, or $2.13 per share. Adjusted for one-time items, the company earned $2.31 per share, slightly exceeding the $2.29 per share anticipated by analysts.