PepsiCo profits up as charges fade but sales slip after price rises
9 February 2024, 15:54
Shares dropped 3% at the opening bell even as the company announced a 7% boost to its annual dividend.
PepsiCo got a bump to fourth quarter profits thanks in part to lower charges and continued price rises, but higher prices have weakened consumer demand.
The food and drinks company said on Friday that it expects organic revenue growth of at least 4% this year. That is less than half the 9.5% growth that PepsiCo booked in 2023.
Shares dropped 3% at the opening bell even as the company announced a 7% boost to its annual dividend, and said that it would buy back about one billion dollars-worth (£0.8 billion) of its shares.
For the three months ending December 30, PepsiCo earned 1.3 billion dollars (£1.03 billion), or 94 cents per share. That compares with 518 million dollars (£410 million), or 37 cents per share, a year earlier.
Excluding an impairment charge and other items, earnings were 1.78 dollars per share. The performance topped the 1.72 dollars per share analysts polled by Zacks Investment Research expected.
Revenue slipped to 27.86 billion dollars (£22.09 billion) from 28 billion dollars (£22.20 billion) and it was a rare miss for the company. Wall Street had projected revenue of 28.24 billion dollars (£22.39).
Pepsi has wrestled with higher prices and how to pass those costs on, raising prices by double-digit percentages for several quarters.
Global supermarket chain Carrefour said last month that it will stop selling PepsiCo products in its stores in France, Belgium, Spain and Italy because of price increases for popular items such as Lay’s potato chips, Quaker Oats, Lipton Iced Tea and its namesake soda.
PepsiCo said at the time that it would continue to engage in good faith with Carrefour to try to ensure that it products remained available.
Its profits are up, though higher prices have dragged down sales as people trade down to cheaper brands. PepsiCo has been shrinking package sizes of some products in that environment.
PepsiCo Inc, based in Purchase, New York, has said price increases should ease and largely align with inflation, which has fallen considerably.
PepsiCo has pointed to higher costs for grain and cooking oil as it has raised prices. Costs for those food commodities surged following Russia’s invasion in Ukraine but have since retreated on global markets from record highs in 2022.
