PepsiCo posted third-quarter net income attributable to the company of $3.05 billion, or $2.23 per share, exceeding analyst projections. Net sales increased 5.6% to $25.27 billion, while organic revenue growth reached 3.1% during the quarter. Despite the strong quarterly results, the company reduced its full-year earnings guidance, now expecting core earnings per share to rise between 2.5% and 3.5%, compared to its prior projection of 5% to 7%. The company maintained its net revenue growth forecast at approximately 6%, representing the high end of its previous guidance range.
International operations continued to drive growth, with international markets representing 41% of net revenue so far in the year. The company achieved volume growth across most international business units, with the exception of its convenient foods division in Europe, the Middle East and Africa. However, the North American market remained a significant drag on overall performance, with the beverage unit experiencing a 2% volume contraction and the food division reporting flat volume growth.
PepsiCo’s North American challenges prompted executives to characterize the domestic turnaround as progressing more slowly than expected. The company has pursued price reductions and innovation strategies to address weak consumer demand, including a pricing cut of as much as 15% on certain snack brands earlier in the year. While management indicated some recent positive trends in zero-sugar drinks and functional beverages, the core soft drink portfolio continued to underperform relative to competitor offerings.
Looking ahead, company leadership signaled plans to implement revenue management tactics, or price increases, in response to anticipated inflation driven by higher energy costs. Simultaneously, executives stated they would apply guardrails to prevent retail prices from becoming uncompetitive. The company also outlined plans for cost reductions focused on eliminating redundancies and discretionary spending to fund innovation and marketing initiatives. Shares rose approximately 2% in morning trading following the announcement.
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