PepsiCo, Inc. reported results for the second quarter 2024. Pepsi posted second-quarter net income of $3.08 billion, up from $2.75 billion a year earlier. Net sales rose nearly 1% to $22.5 billion. Fueled by PepsiCo’s international business, the company’s organic revenue, excluding acquisitions, divestitures and currency changes, increased 1.9% in the second quarter.
“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 PepsiCo Chairman and CEO Ramon Laguarta.
Laguarta continued, “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. As a result, 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.”
For the second quarter, developing and emerging markets such as Egypt and Poland each delivered double-digit organic revenue growth, India and Brazil delivered high-single-digit growth, Thailand, and Pakistan each delivered mid-single-digit growth while Mexico and South Africa delivered low-single-digit growth. International developed markets such as Australia and the U.K. each delivered low-single-digit organic revenue growth. “Year-to-date, we held or gained savory snack share in China, India, Brazil, Australia, and Pakistan, and for beverages, we held or gained share in Australia, South Korea, China, Thailand, Pakistan, Egypt, Vietnam, Saudi Arabia, the U.K. and Brazil,” the company said.
PepsiCo continues to see a long runway for profitable growth for its $36 billion international business – which represented nearly 40 percent of PepsiCo’s annual net revenue in 2023 and has an attractive and growing core operating margin – as it expands presence and scale across geographies by offering a tailored assortment of products, flavors and packages that make its global brands locally relevant
Speaking about international markets, Laguarta said on an analysts call, historically, “we’ve learned that the portfolio is quite diversified and that gives us the opportunity to talk about an International business as a total.”
On India he said, “We continue to see a lot of growth in many parts of our AMESA region, In particular, India is a big growth space for us and is an investment area for sure. The opportunity is massive, if you think – if you take a decade perspective and we’re putting infrastructure on the ground and we’re putting a lot of – we’re investing in the brands, make sure that we build the scale to capture
what is going to be, I think, a high demand market for many, many years.”
Laguarta On China
When it comes to Asia, Laguarta said they are seeing a very cautious consumer in China. The consumer is clearly saving, saving more than spending and that has an implication for many categories.
“Our category is a low ticket item, so we continue to see good performance of our category and we’re gaining share. It’s quite an advantaged business what we have in China, especially on the food side, and we continue to invest in different regions of the country. We continue to get more penetration, additional distribution, that has been a big driver. So additional penetration, additional consumers coming to our brands, coming to the habit of snacking and that has been very positive. So in spite of a cautious consumers, we have levers to continue to grow the business, some of that physical availability, some of that is share of market and better penetration of our brands. I think we have advantaged products there. We’ve been – we have a very strong R&D center in China that develops East for East products. And that is giving us an advantage versus other companies. So, that’s how we’re seeing the different parts of the
world.”