On Tuesday, PepsiCo announced its quarterly financial results, which exceeded the expectations of analysts and prompted the company to revise its full-year earnings forecast upwards. In premarket trading, the company’s stock saw a 2% increase.

Here’s a breakdown of PepsiCo’s report in comparison to the projections of Wall Street analysts surveyed by LSEG (formerly known as Refinitiv):

• Earnings per share: PepsiCo reported adjusted earnings per share of $2.25, surpassing the expected $2.15.
• Revenue: The company’s revenue stood at $23.45 billion, slightly exceeding the expected $23.39 billion.

Performance and Outlook for 2023

Looking ahead to 2023, PepsiCo now anticipates a 13% growth in earnings per share in constant currency, up from its previous estimate of 12%. Remarkably, this marks the third consecutive quarter in which the snack and beverage giant has raised its full-year forecast.

For the third quarter, PepsiCo disclosed a net income attributable to the company of $3.09 billion, equivalent to $2.24 per share, as compared to $2.7 billion, or $1.95 per share, in the same period the previous year. When excluding certain items, the company’s earnings per share were $2.25.

Net sales increased by 6.7% to reach $23.45 billion. Meanwhile, the company’s organic revenue, which excludes any impact from acquisitions and divestitures, saw a notable 8.8% growth during the quarter.

Pepsi, experienced a decline in Volume once again this quarter. This decrease in volume, which considers changes in pricing and currency, was partly attributed to Pepsi’s price adjustments aimed at mitigating inflation, which, in turn, led to reduced demand for its products.

Additionally, the company has been implementing strategies such as reducing portion sizes and introducing smaller value packs to encourage more transactions. While these tactics provide consumers with more affordable choices, they also result in lower overall volume sales.

Pepsi’s North American Beverages Unit and Future Outlook

Specifically, Pepsi’s North American beverages unit reported a 6% drop in volume. CEO Ramon Laguarta explained that the company had scaled back certain promotions, including those related to its bottled water business, to protect profit margins. However, these promotional deals had previously boosted sales volume for these beverages, and their absence had a noticeable impact on overall volume figures.

There were some positive developments within the beverage segment. For instance, Gatorade experienced robust double-digit revenue growth. Furthermore, the company has intentions to reintroduce Mountain Dew Baja Blast, a beloved flavor that has been exclusively available at Taco Bell.

PepsiCo’s North American Food Divisions outperformed their beverage counterparts. Volume for Quaker Foods North America increased by 1%, while Frito-Lay North America’s volume remained steady. Additionally, Quaker Foods’ brands managed to capture a larger market share in key categories like pancake mix and syrup, as noted by company executives in their prepared statements.

As they look ahead to 2024, PepsiCo expects organic revenue growth to fall within the higher range of 4% to 6%, and they project core constant currency earnings per share growth in the high single digits.

Conclusion

PepsiCo’s recent financial results exceeded analyst expectations, leading to an upward revision of its full-year earnings forecast. The company reported strong earnings and revenue growth, although it faced challenges with declining volume due to pricing adjustments.

PepsiCo’s North American food divisions performed well, while the beverage unit showed mixed results. Looking to 2023, the company anticipates continued growth in earnings and revenue, building on its consistent track record of performance.

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