2024-02-09 17:04:00
Shares of the giant PepsiCo snacks and beverages PEPSICO INC -3.55% Close: 0 Open: 171.2 High: 171.39 Low: 166.97 Turnover:– Page Quote News Graphs Company profile Recommendations Additional articles on the subject: Trading with lower prices despite reporting better than expected profits, after the company recorded A surprising drop in quarterly revenue. PepsiCo’s sales fell 0.5% in the fourth quarter to $27.9 billion. Wall Street expected a 1.4% increase to $28.4 billion.
In the profit line, PepsiCo posted earnings per share of $1.78, while analysts were expecting earnings per share of $1.72. The company also announced that it will increase its annual dividend to $5.42 per share from $5.06. PepsiCo expects to deliver 4% organic revenue growth this year with 8% EPS growth. Pepsi’s North American beverage unit posted a 6% decline in volumes in the quarter, in addition to the Quaker Foods division which posted an 8% decline in volumes. The company issued a recall for its granola bars and cereals, a move that hurt its sales in addition to weaker growth in the category as a whole.
“Going forward, we will further improve our focus on providing great-tasting products that offer convenience and compelling value,” said CEO Ramon Laguerta. The CEO also noted that American consumers are changing their behavior from eating and drinking at home to picking up their snacks and drinks from the various convenience stores. Laguarte remains optimistic about the general state of consumers, citing low unemployment and hope that interest rates will drop by the summer and that wages will rise faster than inflation.
PepsiCo executives noted that high credit costs and low personal savings squeezed consumer budgets, especially in North America. The executives also added that consumers prefer smaller packages for reasons of convenience and lower prices. Pepsi believes that in the near future consumers will continue to be more aware of their budget and purchases.
The price increases and concerns about the continuation
Like many of its companies in the snack and beverage industry, Pepsi had to act carefully and find the right way to raise prices in an inflationary environment without losing the customers who buy its popular products, such as Doritos, Lay’s and, of course, Pepsi. In the three months ending in September, Pepsi’s prices were 11% higher than the previous quarter. This was the seventh consecutive quarter in which the company raised prices by at least 10% compared to the corresponding quarter last year.
The price increases that Pepsi took far exceeded the price increases of the broader category: consumer prices for all household foods rose by an average of 3% during the same three-month period.
In the long term, investors fear that weight loss drugs like Ozampic will hurt sales of snacks and packaged foods. However, so far the use of the drug is limited due to country restrictions and a supply that still does not meet the high demand. Wall Street estimates that the damage to food sales will not be as significant as investors fear. Nevertheless, food companies are preparing for the possibility of a healthier future. Pepsi began investing in smaller portion packages, sugar-free drinks, and foods with low to no sodium and saturated fat.
The company trades at a value of 231.6 billion dollars, this after the company’s stock fell by 0.5% since the beginning of the year and rose by only 1.5% in the last 12 months.
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