PepsiCo announced third-quarter financial results that exceeded analyst expectations, with net income of $3.05 billion, or $2.23 per share, compared to $2.6 billion, or $1.90 per share, in the prior year. Net sales rose 5.6% to $25.27 billion, while organic revenue increased 3.1%. However, the company reduced its full-year earnings guidance, now expecting core earnings per share growth of 2.5% to 3.5%, down from its previous projection of 5% to 7%. The company maintained its net revenue growth outlook at approximately 6%.
International markets continued to drive growth, accounting for 41% of net revenue for the year. The company’s international business units demonstrated volume growth across most divisions, with the exception of its convenient foods division in Europe, the Middle East and Africa, which posted a 1% decline. By contrast, the North American business remained a significant concern. The North American beverage unit experienced a 2% volume decline, while the North American food division reported flat volume performance. CEO Ramon Laguarta characterized the domestic turnaround as progressing more slowly than anticipated.
PepsiCo has pursued a turnaround strategy centered on product innovation and increased advertising investment. For its snacks division, the company has emphasized simpler ingredient formulations and functional attributes such as added protein and fiber. A pricing reduction implemented in February on brands including Lay’s and Doritos, ranging up to 15%, has contributed to modest improvements in volume performance, with the snacks business moving to low single-digit positive growth from prior-year declines. The North American beverage segment has seen some stabilization in organic volume trends, particularly in functional hydration and zero-sugar offerings, though the carbonated soft drink portfolio underperformed the broader category.
Looking ahead, company executives anticipate potential inflation pressures from rising energy costs and signaled plans to implement revenue management tactics while maintaining pricing discipline through retailer negotiations. The company intends to pursue cost reductions aimed at eliminating redundancies and discretionary spending, with savings directed toward continued innovation and marketing investments.
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