Pepsi soft drinks are displayed at a convenience store in San Francisco, California.
Justin Sullivan | Getty Images
PepsiCo on Thursday reported mixed quarterly results as the struggles of its North American food and beverage divisions offset strong international demand.
“Results were tempered in the quarter as U.S. food and beverage category performance moderated with consumer budgets tightening due to rising inflationary pressures,” CEO Ramon Laguarta said in prepared remarks shared on the company’s website on Thursday.
During Pepsi’s second quarter, global oil prices swung dramatically due to the U.S. war with Iran. In the U.S., the national average gas price hit a four-year high of $4.56 per gallon in late May, leading many shoppers to watch their spending.
Here’s what the company reported for the quarter ended June 13 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $2.20 adjusted vs. $2.21 expected
- Revenue: $24.18 billion vs. $23.95 billion expected
Pepsi reported second-quarter net income attributable to the company of $2.98 billion, or $2.18 per share, up from $1.26 billion, or 92 cents per share, a year earlier.
Excluding restructuring and impairment charges and other items, the company earned $2.20 per share.
Net sales rose 6.4% to $24.18 billion. Organic revenue, which excludes acquisitions, divestitures and foreign currency, increased 2.4% in the quarter.
Globally, volume for Pepsi’s food increased 3%, while volume for its beverages rose 2%. The metric excludes pricing and foreign exchange fluctuations to reflect demand more accurately.
But Pepsi’s volume growth came from its international markets. Demand was much weaker domestically. Its North American food business reported flat volume for the quarter, and its North American beverage division saw volume drop 4%.
Over the last two years, both segments have seen weaker demand as a result of higher prices. In February, Pepsi cut prices on Lay’s, Tostitos, Doritos and Cheetos by as much as 15% to try to win back shoppers. The company has also been “restaging” some of its iconic brands, like Gatorade and Lay’s, with fresh branding to boost their sales.
Pepsi expects that its North American volumes will recover, but that will take time, particularly after this quarter’s setback.
“Our North America business was softer than we anticipated in the second quarter, and we now expect a more gradual improvement in performance trends for the balance of this year,” CFO Steve Schmitt said in his prepared remarks.
For the full year, Pepsi reiterated its prior forecast that organic revenue will rise between 2% and 4% and core constant currency earnings per share will increase in a range of 4% to 6%.
