Better-than-expected results
Strong category performance
During the third quarter, PepsiCo witnessed broad-based organic revenue growth. Its North America business posted organic revenue growth of 7% while its International business delivered a growth of 12%. In the global beverages segment, organic revenue increased 8% while the global convenient foods segment recorded a growth of 9%.
The Frito-Lay North America business delivered organic revenue growth of 7% in Q3, with market share gains in the macro and savory snack categories. Revenues grew across all channels including large format, foodservice, and convenience and gas.
The Quaker Foods North America business saw organic revenue rise by 5%, helped by double-digit revenue growth in lite snacks, grains and pancake syrups, and high single-digit revenue growth in ready-to-eat cereal, grits and bars. PepsiCo Beverages North America saw organic revenues increase by 6%, helped by gains from Gatorade, bubly, and Pepsi.
PepsiCo delivered strong organic growth across all its international divisions with Africa, Middle East and South Asia (AMESA) posting the highest increase of 17%, followed by Europe at 13%. The Latin America division and the Asia Pacific, Australia and New Zealand and China region division both recorded revenue growth of 9%.
Raised outlook
PepsiCo expects its global beverage and convenient foods businesses to stay resilient and perform well for the remainder of the year. The company expects organic revenues to grow 10% in fiscal year 2023.
Based on its strong year-to-date performance, the beverage giant raised its earnings outlook for the full year and now expects core EPS to grow 11% YoY to $7.54. Its previous expectation was for core EPS to grow 10% to $7.47. It also raised its outlook for core constant currency EPS growth to 13% from 12%.
In its earnings report, PepsiCo stated that for fiscal year 2024, it expects to deliver results towards the upper end of its long-term target ranges for organic revenue and core constant currency EPS growth. The company expects organic revenue growth of 4-6% and core constant currency EPS growth in the high single digits for the long term.