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PepsiCo Reports Q2 2024 Results: EPS Growth Despite Revenue Challenges
PepsiCo, Inc. (NASDAQ: PEP) has released its financial results for the second quarter of 2024, showcasing a mixed performance. While the company saw a modest net revenue growth of 0.8% for the quarter and 1.5% year-to-date, the impact of foreign exchange has slightly hindered these figures by 1%. Despite these challenges, PepsiCo managed to deliver a strong EPS growth of 13% for the quarter, translating to $2.23 per share.
Key Highlights from Q2 2024
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Net Revenue and EPS Growth: PepsiCo reported a 0.8% increase in net revenue for Q2, with a year-to-date growth of 1.5%. The company’s EPS saw a significant 13% rise, reaching $2.23.
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Organic Performance: On an organic basis, which excludes the impact of foreign exchange, PepsiCo achieved a 1.9% revenue growth in Q2 and 2.3% year-to-date. Core EPS stood at $2.28 for the quarter.
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Segment Performance:
- Frito-Lay North America: Experienced a slight decline in net revenue by 0.5%.
- Quaker Foods North America: Faced a substantial decline of 18% in net revenue due to product recalls.
- PepsiCo Beverages North America: Recorded a 1% increase in net revenue.
- Latin America: Saw a 7% growth in net revenue.
- Europe: Achieved a 2.5% increase in net revenue.
- Africa, Middle East, and South Asia: Reported a 2% growth in net revenue.
- Asia Pacific, Australia, New Zealand, and China: Experienced a 2% decline in net revenue.
Year-to-Date Performance
For the first half of 2024, PepsiCo reported:
- Net Revenue Growth: 1.5% with a 1% foreign exchange impact.
- EPS Growth: 10% year-to-date, achieving $3.71 per share.
- Core EPS: $3.89, reflecting a 9% increase in constant currency.
Strategic Outlook and Guidance for 2024
Chairman and CEO Ramon Laguarta emphasized PepsiCo’s commitment to driving productivity and disciplined commercial investments to stimulate growth for the remainder of the year. Key focus areas include:
- Optimizing North America Convenient Foods Portfolio: Providing targeted value propositions.
- Marketing and Advertising: Enhancing initiatives to bolster brand presence.
- Distribution Capabilities: Leveraging precise marketplace execution.
Updated Financial Guidance:
- Organic Revenue Growth: Approximately 4% for the full year, revised from at least 4%.
- Core Constant Currency EPS Growth: At least 8%.
- Effective Tax Rate: Maintaining a core annual effective tax rate of 20%.
- Shareholder Returns: Projecting total cash returns of approximately $8.2 billion, with $7.2 billion in dividends and $1.0 billion in share repurchases.
- Foreign Exchange Impact: An anticipated 1% headwind to both net revenue and core EPS growth.
This guidance implies a 2024 core EPS of at least $8.15, marking a 7% increase compared to 2023.
Market Reaction
Despite the positive EPS growth, PepsiCo’s stock saw a decline of 2.07% in premarket trading following the earnings release. The market’s reaction reflects concerns over the modest revenue growth and the impact of foreign exchange on the company's financial performance.
Source: PEP
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