PepsiCo announced third-quarter earnings and revenue that surpassed Wall Street expectations, driven primarily by robust performance in international markets. The company reported fiscal third-quarter net income of $3.05 billion, or $2.23 per share, compared with $2.6 billion or $1.90 per share in the prior year. Net sales increased 5.6% to $25.27 billion, with organic revenue growing 3.1% during the quarter.
Despite the solid quarterly performance, PepsiCo reduced its full-year earnings guidance, citing slower-than-anticipated improvement in its North American operations. The company now projects core earnings per share growth of 2.5% to 3.5% for the full year, down from its previous target of 5% to 7%. Net revenue growth expectations were adjusted to approximately 6%, representing the high end of the prior range of 4% to 6%.
International markets remained the company’s strongest segment, accounting for 41% of net revenue year-to-date. The international division achieved volume growth across all business units except one, with only the convenient foods division in Europe, the Middle East and Africa reporting a 1% volume decline. In contrast, North American operations continued to underperform, with the beverage unit experiencing a 2% volume contraction and the food division reporting flat volume growth.
Management attributed the domestic turnaround’s slower pace to challenging consumer conditions, with CEO Ramon Laguarta acknowledging that North American performance “represents a meaningful opportunity for improvement.” The company has pursued innovation, pricing adjustments, and marketing initiatives to address weakness, including a 15% price reduction on select snacks earlier in the year. While snack brands showed improvement moving from negative to low single-digit positive volume growth, the North American beverage business remained disappointing, particularly carbonated soft drinks, which lagged behind category trends and competitor performance.
PepsiCo executives anticipate additional inflationary pressures from rising energy costs and plan to implement “revenue management tactics” while maintaining guardrails against excessive retail pricing. The company intends to pursue cost reductions and efficiency improvements to fund ongoing investments in product innovation and marketing initiatives.
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