Despite a drop in consumer demand for snacks and drinks, PepsiCo has reported higher than expected earnings for Q2 2024. Net income rose 12% to $3.08 billion for the April-June quarter of 2024, as compared to $2.75 billion in the same period last year.
However, the net revenue was $22.5 billion for Q2 2024, which was a less than 1% growth for the brand YoY. In Q2 2023, the net revenue was $22.3 billion. The company’s organic revenue (excludes acquisitions, divestitures and currency changes), increased 1.9% for the quarter, fueled by Pepsi’s international business.
“During the second quarter, our business delivered net revenue growth, strong gross and operating margin expansion and double-digit EPS growth, remaining agile despite facing difficult net revenue growth comparisons versus the prior year, subdued category performance within North America convenient foods and the impacts associated with certain product recalls at Quaker Foods North America,” said Chairman and CEO Ramon Laguarta.
The North American demand for its Frito-Lay snacks was “subdued” during the quarter. Its volume declined 4%, while Pepsi’s North American beverage unit saw volume shrink 3%. Laguarta said the company plans to amp up deals and advertising in the second half of this year.
He mentioned, “For the balance of the year, we will further elevate and accelerate our productivity initiatives and make disciplined commercial investments in the marketplace to stimulate growth. These investments will focus on surgically providing optimal value propositions within certain portions of our North America convenient foods portfolio, amplifying our advertising and marketing initiatives and leveraging our go-to-market distribution capabilities to enable more precise marketplace execution.”
The F&B giant’s sales volumes fell 3% globally in the second quarter. This makes it PepsiCo’s eighth quarter of dipping sales volumes. Narrowing the company’s revenue outlook for the full year, Laguarta said, “We now expect to deliver approximately 4 percent organic revenue growth (previously at least 4 percent) and have a high degree of confidence in delivering at least 8 percent core constant currency EPS growth for full-year 2024.”
Shares of the company fell more than 2% in premarket trading.
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