PepsiCo (PEP) Q4 2024 earnings

PepsiCo reported mixed quarterly results on Tuesday as demand for its snacks and drinks fell in North America for the fifth straight quarter.

Shares of the company dropped more than 2% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: $1.96 adjusted vs. $1.94 expected
• Revenue: $27.78 billion vs. $27.89 billion expected

Pepsi posted fourth-quarter net income attributable to the company of $1.52 billion, or $1.11 per share, up from $1.3 billion, or 94 cents per share, a year earlier.

Excluding restructuring, impairment charges and other items, the food and beverage company earned $1.96 per share.

Net sales dropped slightly to $27.78 billion.

The company’s organic revenue, which excludes acquisitions, divestitures and foreign exchange, rose 2.1% in the fourth quarter.

Pepsi’s worldwide volume increased 1% for convenient foods and 1% for beverages. The metric strips out pricing and foreign exchange.

But demand was weaker in the company’s home market, North America. Pepsi has previously said that shoppers in the U.S. have grown more cautious, snacking less and making fewer purchases at convenience stores.

Still, executives think Pepsi’s domestic business will pick up again.

“We’re very confident that our North American business will accelerate this year. We’re confident in our plans … and we see opportunities, especially away from home,” Laguarta told analysts on the company’s conference call.

Frito-Lay North America’s volume fell 3% in the quarter. Consumers have been watching their grocery budgets, thanks to several years of higher food prices and interest rates.

“In 2024, the salty and savory snack categories underperformed broader packaged food, following multiple years in which these categories had outperformed packaged food,” CEO Ramon Laguarta and CFO Jamie Caulfield said in prepared remarks.

The company’s North American beverage unit reported a 3% decline in quarterly volume. But there were some bright spots for the division, as Gatorade gained market share and Mountain Dew Baja Blast surpassed $1 billion in annual sales.

Pepsi is also planning to push more into protein drinks, executives said on the company’s conference call. The segment is growing quickly, fueled in part by the adoption of GLP-1 drugs.

Quaker Foods North America, still reeling from a recall from the prior December, saw its volume fall 6%. The company expects that Quaker’s performance will improve in 2025 as it laps the fallout from the recall, executives said in prepared remarks.

For 2025, Pepsi is projecting a low-single-digit increase in its organic revenue and a mid-single-digit rise in its core constant currency earnings per share.

“Looking ahead to 2025, we will continue to build upon the successful expansion of our international business, while also taking actions to improve performance in North America,” Laguarta said in a statement.