Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

Earnings Call: Pepsico Outlines 2024 Strategy Amid Inflation Concerns and Changing Consumer Habits

Published Oct 10, 2023 12:16PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
PEP
+0.47%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

PepsiCo (NASDAQ:PEP)'s Chairman and CEO, Ramon Laguarta, and CFO, Hugh Johnston, discussed the company's strategies and outlook for 2024 during their 2023 Third Quarter Earnings Question-and-Answer Session. Amidst global inflation concerns, the executives highlighted volume and margin optimization strategies, changing consumer trends, and the company's continued focus on cost reduction and productivity. PepsiCo, known for its track record of meeting or beating consensus for 55 consecutive quarters, provided its 2024 guidance earlier than usual, citing increased visibility into commodity inflation.

According to InvestingPro data, PepsiCo has a market cap of $225.46B USD and has seen a revenue growth of 10.11% in the last twelve months ending in Q2 2023. The company's gross profit for the same period stood at $48.39B USD, demonstrating a healthy profit margin of 53.69%.

Key takeaways from the call include:

  • PepsiCo is experiencing sequential volume improvement globally, with units growing faster than volume. This is attributed to consumers shifting to smaller packs, a trend the company is supporting through pricing and mix strategies.
  • In its PepsiCo Beverages North America (PBNA) business, the company has been aggressive in pruning unprofitable promotions, leading to a 2.5% volume impact. In Latin America, product portion sizes are being reduced to maintain affordability for consumers with limited disposable income.
  • The company expects higher inflation in 2024, leading to a higher price mix compared to previous years. Johnston stated that inflation will be slightly elevated compared to pre-pandemic levels, with pricing expected to be roughly in line with inflation.
  • Despite expecting consumers to continue being cautious, PepsiCo's revenue outlook accommodates this, and its long-term structural tailwinds and market share are expected to remain strong. The company's return on assets, according to InvestingPro data, was 8.44% for LTM2023.Q2.
  • The executives also emphasized the company's focus on automation, digitalization, and precision in decision-making. They mentioned their commercial relationship with Instacart (NASDAQ:CART), enhancing their direct store delivery (DSD) system.
  • PepsiCo is confident in the positive trends driving consumer choices, such as urbanization, middle class development, and changing snacking habits. They are adapting their portfolio by reducing sodium, fat, and sugar, and introducing new cooking methods to their snacks.

According to InvestingPro Tips, PepsiCo is a prominent player in the Beverages industry and has maintained dividend payments for 53 consecutive years, a testament to its financial stability and commitment to shareholders.

  • The company also discussed its energy drink strategy and the importance of CELSIUS in their distribution system, noting its growth and positive impact on their overall portfolio.

In the face of inflation and changing consumer habits, PepsiCo (NASDAQ:PEP) is focusing on optimizing its volume and margins, driving productivity, and reducing costs. The company's early guidance for 2024 reflects a cautious yet confident approach, backed by strong commercial plans in developed markets and a track record of consistently meeting or exceeding consensus. For more insights like these, consider checking out the additional 13 tips available on the InvestingPro platform.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Earnings Call: Pepsico Outlines 2024 Strategy Amid Inflation Concerns and Changing Consumer Habits
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email