Strong foreign demand helps PepsiCo surpass sales forecasts; product recalls hinder US sales
PepsiCo announced its first-quarter financial results for the year 2024. The company reported higher-than-expected sales due to robust demand for its snacks and drinks abroad throughout the quarter. Still, there was a halt in the US for it. It reported $18,250 million in net revenue for the quarter, a 2.3% increase over the $17,846 million it made in the same time the previous year. Growth in organic revenue was 2.7%. GAAP net income reached $2 billion, or $1.48 per share, an increase of 6%. Core EPS increased 7% to $1.61.
Operating profit increased to $2,717 million in the first quarter of 2024 from $2,629 million in the same period the previous year.
“Our companies continued to be flexible and executed well in the first quarter, with our international business putting in particularly excellent results. Despite the impact of several product recalls at Quaker Foods North America and a challenging net revenue growth comparison from the previous year, we delivered a sequential improvement in our volume trends and year-over-year growth in our net revenue, operating profit margin, and EPS, according to Chairman and CEO Ramon Laguarta. A possible salmonella infection led to the quarter’s Quaker Oats cereal, bars, and snack recall.
During the quarter, Quaker Foods North America’s net sales decreased by 23.7% to $593 million from $777 million in the prior year. Net revenue for Frito-Lay North America was $5,676 million, 1.7% higher than $5,583 million. sales for the first quarter of PepsiCo Beverages North America was $5,874 million, while sales for Latin America was $2,067 million. Asia Pacific, Australia, New Zealand, and China Region reported sales of $1,064 million, while the markets in Africa, the Middle East, and South Asia reported revenue of $1,040 million.
PepsiCo continues to anticipate at least 4% growth in organic sales and at least 8% growth in core constant currency EPS for 2024, in line with its prior forecast. It said that a core yearly effective tax rate of twenty percent is what it anticipates. It went on to say that the expected $8.2 billion in total cash distributions to shareholders include $7.2 billion in dividends and $1.0 billion in share repurchases. PepsiCo offers advice that is not based on GAAP.
Furthermore, based on current market consensus rates, the firm continues to anticipate that reported net sales and core EPS growth would be impacted by a headwind from foreign currency translation of around one percentage point. “This assumption and the guidance above imply at least $8.15 in core EPS for 2024, representing a 7% increase from the projected $7.62 core EPS for 2023,” the statement said.
According to Ramon Laguarta, “We will continue to concentrate our efforts on performing well in the marketplace and delivering delicious products that give consumers convenience and good value.” In order to finance ongoing investments in our brands, capabilities, and pep+ projects, we will also keep stepping up and quickening our efficiency measures. With that in mind, we still project at least 4% increase in organic sales and 8% growth in core constant currency EPS in 2024. Furthermore, starting with our June 2024 payment, our previously stated 7% annually dividend increase is anticipated to be our 52nd consecutive annual rise.
