PepsiCo Surpasses Quarterly Expectations Amidst Quaker Foods Recall
PepsiCo reported impressive financial results for the first quarter of 2024, outperforming analysts’ expectations despite the impact of a Quaker Foods recall. The company’s adjusted earnings per share reached $1.61, exceeding the projected $1.52. Net sales witnessed a 2.3% rise to $18.25 billion, while organic revenue experienced a 2.7% growth.
Despite these positive figures, PepsiCo faced volume pressures, with a 0.5% decline in its food division and flat volume in its beverage segment. The Quaker Foods recall significantly impacted its North American division, resulting in a 22% volume drop. This recall, initiated in December due to potential salmonella contamination, was expanded in January.
However, PepsiCo’s international operations provided some respite. The company’s snacks and beverages in the Asia Pacific region exhibited substantial growth, with volume increases of 12% and 7%, respectively. Even in Europe, where grocery prices have risen, beverage volume grew by 7% and snack volume by 2%.
Despite the challenges, PepsiCo remains optimistic about its 2024 outlook. The company anticipates at least 4% organic revenue growth and 8% EPS growth in constant currency. PepsiCo executives acknowledged the normalization of category growth rates compared to recent years and the continued cost-consciousness of consumers.
In June, PepsiCo plans to close a Quaker Oats plant associated with the recalls, although production has already ceased. The company has resumed limited production of certain affected products.
Overall, PepsiCo’s strong performance in international markets and its positive outlook for 2024 indicate the company’s resilience in the face of challenges.
