PepsiCo reported better-than-expected revenue in the third quarter despite lackluster North American demand.
Net revenue rose 5.6% to $25.27 billion in the July-September period. Wall Street had expected revenue of $24.95, according to analysts polled by FactSet.
The company, based in Purchase, New York, said its global snack food volumes increased 4%, the highest rate of growth since 2021. That was largely due to its international business, which makes
up 41% of the company's revenue.
World Cup-related demand for Lay's snacks was strong, the company said, and PepsiCo gained share in key markets like China and Brazil. Snack food volumes rose 11% in the Asia Pacific region, PepsiCo said.
Fast-growing categories include snacks with simpler ingredients, like Doritos and Gatorade Lower Sugar with no artificial colors or flavors, as well as protein-enhanced snacks, the company said.
But PepsiCo's North American results were weaker, with Frito-Lay snack food volumes flat compared to the same period last year and beverage volumes down 2%. PepsiCo said growth in sales of U.S. salty snacks was offset by sales declines in Canada.
PepsiCo said it's prioritizing innovation and more effective marketing to improve business in North America. The company said it is also planning to cut corporate costs and will begin other initiatives not directly tied to sales growth in the coming months.
PepsiCo lowered its earnings expectations for the year, saying it now expects adjusted earnings per share to grow 2.5% to 3.5%. Previously it had expected growth between 5% and 7%. The company now expects full-year revenue growth of 6%, the high end of earlier forecasts of between 4% and 6%.
Net income rose 17% to $3.07 billion in the third quarter. Adjusted for one-time items, the company earned $2.34 per share. That was higher than the $2.29 per-share profit analysts expected.
PepsiCo share rose 1% in pre-market trading Thursday.
