4 February 2025
If you are covering PepsiCo's latest results, please see the following comment from Matt Dorset, equity research analyst at Quilter Cheviot:
"PepsiCo posted relatively lacklustre results today. While the company beat on earnings, which is always a good thing, it was not a particularly high quality beat given it was largely as a result of a lower than expected tax charge.
"PepsiCo’s Q4 organic sales grew 2.1%, marginally beating expectations, and sales were better internationally, up 6%, than in North America. Food sales in the US fared better than soft drinks, which opposes the skew seen in most international markets. However, this comes as little surprise given the pressure that has continued to mount on US consumers which is also impacting the sales achieved by PepsiCo’s competitors. Given the company tends to report earlier than others, this is not a good sign for other businesses such as Mondelez which is due to report later today.
"Looking ahead to the rest of 2025, PepsiCo has plans to help improve its current situation, with North American business expected to pick up later in the year. However, the company’s overall guidance is looking light. PepsiCo is now looking for low single digit organic sales growth, which it expects to contribute to mid-single digit earnings - below management’s longer-term ambition for the company.
"Ultimately, US consumers are still feeling the heat despite good wage increases and low unemployment, and this is translating into people tightening their belts and limiting spending on even small luxuries while doing their food shopping. This slightly disappointing guidance is perhaps a signal of some early in the year conservatism, as well as macro uncertainty, but it amounts to a somewhat disappointing outlook which will do little to excite investors."
