PepsiCo managed to beat analyst expectations for both quarterly earnings and revenue, but the victory felt bittersweet as the company slashed its full year profit projections. While international markets provided a much needed boost, the beverage and snack giant admitted that its recovery in North America is taking significantly longer than anticipated. The company now expects core earnings per share to grow by just 2.5 percent to 3.5 percent, a sharp drop from its previous target of up to 7 percent.
The disparity between regions was stark in the latest reports. Outside of the United States, PepsiCo found strong footing, with international operations accounting for over 40 percent of total net revenue this year. Almost every single global business unit showed volume growth, proving that the brand remains powerful abroad even as it stumbles at home. In contrast, the North American beverage sector saw volumes shrink by 2 percent, while food sales remained stagnant.
CEO Ramon Laguarta acknowledged that the performance in the home market fell short of goals and represents a significant area for improvement. To combat the slump, PepsiCo is pivoting toward healthier alternatives such as zero sugar drinks and functional hydration products. On the snack side, the company is experimenting with alternative oils and added proteins to attract health conscious consumers through brands like Doritos and Quaker Oats.
Despite these challenges, there are some signs of hope as organic revenue began to tick upward toward the end of the quarter. However, management noted that their flagship carbonated soft drinks have been lagging behind competitors like Coca Cola. To fund further innovation and aggressive marketing campaigns intended to win back American shoppers, Laguarta announced plans to trim corporate waste by cutting redundant costs and reducing discretionary spending across the organization.
