PepsiCo reported fiscal third-quarter results that exceeded analyst projections, driven primarily by strong international performance. The company posted net income attributable to the company of $3.05 billion, or $2.23 per share, compared with $2.6 billion, or $1.90 per share, a year earlier. Excluding certain items, earnings reached $2.34 per share. Net sales increased 5.6% to $25.27 billion, while organic revenue growth, which strips out acquisitions, divestitures and currency effects, rose 3.1% during the quarter.
Despite the solid quarterly results, PepsiCo adjusted its outlook for the remainder of 2026. The company now expects core earnings per share to increase between 2.5% and 3.5%, narrowing from its previous projection of 5% to 7% at the low end. The company maintained expectations for net revenue growth of approximately 6%, representing the high end of its prior guidance range of 4% to 6%. Chief Financial Officer Steve Schmitt cited a slower-than-anticipated turnaround in the struggling domestic business as the primary reason for the revised forecast.
International markets remained a consistent strength, with the company’s overseas business accounting for 41% of net revenue year-to-date. The international segment posted volume growth in all but one division during the quarter, with only convenient foods in Europe, the Middle East and Africa reporting a volume decline. In contrast, North American operations continued to disappoint. The North American beverage unit experienced a 2% volume contraction, while the North American food division reported flat volume performance. Chief Executive Officer Ramon Laguarta acknowledged that the region “performed below our expectations.”
The company has implemented various strategies to revitalize its domestic operations, including price reductions implemented in February on snacks like Lay’s and Doritos, which ranged as much as 15%. Leadership indicated that recent trends suggest these efforts are beginning to generate results, with snacks moving from low single-digit negative growth last year to low single-digit positive growth currently. However, the North American beverage portfolio, particularly carbonated soft drinks, continued to lag behind industry trends.
Looking ahead, executives flagged expectations for inflationary pressures stemming from higher energy costs and indicated the company would employ pricing strategies while attempting to maintain appropriate guardrails. Additional cost reduction initiatives focused on eliminating redundancies and discretionary spending are planned to fund investments in innovation and marketing. Pepsi shares rose approximately 2% in morning trading following the announcement.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI