PepsiCo's International Growth Offsets North America Lull, Affirms 2024 Outlook

PepsiCo Inc PEP reported first-quarter FY24 sales growth of 2.3% year-on-year to $18.25 billion, beating the analyst consensus estimate of $18.079 billion.

Net revenue from Frito-Lay North America increased 2% Y/Y, Quaker Foods North America plunged 24%, and PepsiCo Beverages North America climbed 1%.

Latin America sales jumped 16% Y/Y, and Europe sales rose 3%. Gross profit increased 1.5% Y/Y to $10 billion, and the margin contracted 43 basis points Y/Y to 54.8%.

Operating margin expanded by 16 basis points to 14.9%, and operating income for the quarter increased 3.3% to $2.7 billion.

The company held $8.35 billion in cash and equivalents as of March 23, 2024. Operating cash flow used in the quarter totaled $(1.04) billion.

Adjusted EPS of $1.61 beat the consensus estimate of $1.52.

Chairman and CEO Ramon Laguarta, said, “During the first quarter, our businesses remained agile and performed well, with a strong performance from our International business. We delivered a sequential improvement in our volume trends, and year-over-year growth in our net revenue, operating profit margin and EPS – despite the impact of certain product recalls at Quaker Foods North America and a difficult net revenue growth comparison from the prior year.”

Outlook: PepsiCo continues to expect FY24 organic revenue growth of at least 4%, and at least 8% increase in core constant currency EPS.

PepsiCo’s assumption and the guidance imply 2024 adjusted EPS of at least $8.15 (consensus $8.15), a 7% increase compared to 2023 adjusted EPS of $7.62.

The company continues to expect total cash returns to shareholders to be approximately $8.2 billion, consisting of dividends of $7.2 billion and share repurchases of $1.0 billion.

Laguarta continued, “In addition, our previously announced 7 percent annualized dividend increase is expected to begin with our June 2024 payment and will represent our 52nd consecutive annual increase.”

Price Action: PEP shares are trading lower by 0.11% at $176.27 in premarket at the last check Tuesday.

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