The income of the multinational Pepsico fell by surprise in the fourth quarter of the year, disappointing market expectations, according to the accounts published this Friday by the food and beverage giant. The turnover for the fourth quarter was 27,850 million dollars (25,860 million euros at the current exchange rate), 0.5% more than in the equivalent period of the previous year, despite the strong price increases of its products. The announcement comes in the midst of Carrefour, which removed Pepsico products from its shelves earlier this year after refusing to accept price increases that it described as “unacceptable.”
Pepsico has consistently raised its prices in recent years amid higher input costs, allowing the company to aggressively grow profits and beat market profit expectations, but this time it fell short.
“Organic volume decreased in our businesses as category growth rates moderated, while consumer preferences have continued to evolve towards smaller package sizes that offer convenience and affordability,” Spaniard Ramón Laguarta explained to analysts. , president and CEO of Pepsico. “In addition, our organic volume was negatively impacted by a product recall at Quaker Foods North America, as well as business disruptions in certain markets due to international conflicts,” he added. The Quaker Oats subsidiary recalled items of cereal bars and granola cereals from the market in the fourth quarter that could be contaminated with salmonella.
Pepsico does not expressly mention the fight with Carrefour in its results, but has included a new express warning in its annual report on the risk of retailers recalling their products: “The retail sector is also affected by the actions and growing power of retailers, including as a result of further consolidation of ownership giving rise to large retailers or buying groups with greater purchasing power, especially in North America, Europe and Latin America,” he says. “In this changing retail landscape, retailers and buying groups have affected and may continue to affect our ability to compete in these jurisdictions by demanding lower prices or more intense promotional programs, withdrawing our products or otherwise reducing space in stores. shelves assigned to our products,” he adds.
The profit increases
Despite the unexpected drop in sales in the fourth quarter, Pepsico has managed to increase its turnover by 5.9% for the year as a whole, to $91,471 million. Profit has skyrocketed in the fourth quarter, going from $518 million to $1,302 million, because in the last part of 2022 the company recorded extraordinary losses due to the Russian invasion of Ukraine and a deterioration in its subsidiary SodaStream. Thanks to the quarterly improvement, Pepsico closes the year with a profit increase of 1.8%, up to 9,074 million dollars.
By 2024, Pepsico expects to achieve organic revenue growth of at least 4% and constant currency earnings per share growth of at least 8%. The company has also announced a 7% increase in the dividend, marking the 52nd consecutive annual increase. Pepsico also plans to buy back shares worth approximately $1 billion.
“We are satisfied with our results for 2023, as we have successfully overcome another year of high levels of inflation, macroeconomic volatility, geopolitical tensions and international conflicts,” said Ramón Laguarta. “Looking forward to 2024, we expect our business to continue performing well and delivering strong top-line growth in an environment where we expect consumer preferences and behaviors to largely return to pre-pandemic norms. such as returning to work, traveling more often and consuming more away from home than at home, although focusing more on comfort and good value for money,” he told analysts.
The company has also included a warning in its annual report due to the complaint it received last year over its packaging. The New York prosecutor's office announced in November a lawsuit, which it described as historic, against the food and beverage company for contaminating the environment and compromising public health with its single-use plastic bottles, caps and wrappers.
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