TLDR
- PepsiCo posted Q3 revenue of $23.94 billion and EPS of $2.29, both topping analyst projections
- Beverage sales grew 2% in North America while food revenue dropped 3% due to ongoing snacking weakness
- Poppi brand delivers strong performance with retail sales surging over 50% from last year
- Walmart US CFO Steve Schmitt named new CFO, replacing 30-year veteran Jamie Caulfield
- Elliott Management’s $4 billion stake puts pressure on company to restructure operations
PepsiCo delivered third-quarter earnings that beat Wall Street forecasts. The company reported revenue of $23.94 billion against expectations of $23.85 billion.
Earnings per share reached $2.29, edging past the $2.27 consensus. Shares climbed nearly 1% in premarket trading Thursday.
The beverage business powered North American results. Revenue in this segment increased 2% during the quarter.
Pepsi’s flagship brand grew both volume and revenue. Hydration products like Proper also showed strong volume performance.
The poppi acquisition continues delivering results. Retail sales jumped more than 50% year-over-year since the $1.95 billion purchase.
Food Business Weakness Persists
The North American food division struggled in the quarter. Revenue fell 3% as consumer demand for snacks remains soft.
Frito-Lay products and other foods saw volume declines of 2%. The company is working to turn around performance in this segment.
PepsiCo has expanded value brand distribution to combat pricing concerns. Chester’s and Santitas are getting wider availability.
The company is also speeding up artificial color removal from products. These efforts target shifting consumer preferences and inflation worries.
International Growth Balances Domestic Challenges
International markets provided a bright spot. Europe, Middle East and Africa revenue grew 5.5% in the quarter.
Latin America delivered 4% revenue growth. Asia also posted higher sales volumes during the period.
Net income decreased 11% to $2.6 billion. The drop reflects pressure in core North American markets.
Elliott Investment Management revealed a $4 billion stake last month. The activist investor wants PepsiCo to streamline its portfolio and focus on core brands.
Elliott suggested refranchising North American bottlers. The firm believes this could unlock value similar to Coca-Cola’s 2017 move.
CEO Ramon Laguarta highlighted international resilience and improving North American beverage momentum. He said revenue growth accelerated during the quarter.
PepsiCo kept its full-year 2025 outlook unchanged. The company expects low-single-digit organic revenue growth and flat core constant currency earnings per share.
Leadership Changes Take Effect
Steve Schmitt will become CFO on November 10. He currently holds the CFO position at Walmart US.
Jamie Caulfield retires after three decades with PepsiCo. He remains in an advisory capacity through May 15.
Board member Darren Walker will depart effective November 19. Walker serves as President of the Ford Foundation.
PepsiCo stock is down about 8% year-to-date. Coca-Cola shares are up roughly 6% in the same period.
The poppi brand integrated into PepsiCo’s distribution system in early September. Management expressed optimism about future growth potential for the acquired brand.
