PepsiCo Raises Dividend After Mixed Q4 Performance, Shares Fall As Annual Organic Revenue Outlook Disappoints

PepsiCo, Inc.PEP shares are trading lower on Friday in the premarket session following the fourth quarter and full-year 2023 results.

The company reported fourth-quarter FY23 sales of $27.85 billion, missing the analyst consensus estimate of $28.40 billion. Sales declined 0.5% on a year-over-year basis.

Operating profits at Quaker Foods North America and PepsiCo Beverages North America fell 79% and 27%, respectively, weighing on quarterly performance.

The company reported adjusted EPS of $1.78 in the fourth quarter, beating the street view of $1.72. 

“Moving forward, we will further sharpen our focus on providing consumers great-tasting products that offer convenience and compelling value,” said Chairman and CEO Ramon Laguarta. 

Gross profit increased 1.2% year over year to $14.75 billion, while operating profit almost doubled on year to $1.68 billion.

“We will also aggressively manage our costs to accelerate productivity, and invest more in our brands, innovation, channel expansion and pep+ transformation,” Laguarta added.

As of December 30, 2023, the company had cash and equivalents worth $9.76 billion. The company’s long-term debt obligations stands at $37.595 billion.

Dividend Increase: The company announced a 7% increase in its annualized dividend to $5.42 per share from $5.06 per share, payable in June 2024.

Outlook: For 2024, the company expects at least a 4% increase in organic revenue, with at least an 8% increase in core constant currency EPS.

In addition, the company expects a core annual effective tax rate of 20%; and total cash returns to shareholders of approximately $8.2 billion, comprised of dividends of $7.2 billion and share repurchases of $1.0 billion.

Price Action: PEP shares are trading lower by 1.45% to $171.33 premarket on the last check Friday. 

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