PepsiCo’s Q3 Performance and Market Impact
Strong Earnings and Growth Prospects Show Resilience in the Face of Ozempic Concerns.
PepsiCo, a leading beverage and snack company, has reported robust third-quarter results that defy concerns about the impact of weight-loss drugs like Ozempic on its business.
Earnings Breakdown
PepsiCo exceeded Wall Street profit expectations, leading to a 3% increase in pre-market trading of its shares. Here are the key highlights:
- Net Sales: $22.3 billion, up 6.7% YoY, though slightly below estimates of $23.38 billion.
- Frito-Lay North America Sales: $5.95 billion, a 7% YoY increase, close to estimates.
- Quaker Foods North America Sales: $747 million, a 5% YoY increase, beating estimates.
- North America Beverages: $7.16 billion, up 8% YoY, exceeding estimates.
- Europe Sales: $3.7 billion, a 2% YoY increase, slightly below estimates.
- Latin America Sales: $3 billion, a remarkable 21% YoY increase, surpassing estimates.
- Africa/Middle East Sales: $1.61 billion, a 6% YoY decrease, falling short of estimates.
- Asia Pacific Sales: $1.21 billion, a 4% YoY increase, just below estimates.
- Organic Sales Growth: A strong 8.8% YoY increase, beating estimates.
- Core EPS: $2.25, up 16% YoY, exceeding estimates of $2.16.
- Core EPS Guidance: A positive outlook, with a 13% YoY growth projection, up from the previous 12% forecast.
Market Insights
Despite recent concerns and a 12% decline in PepsiCo’s stock over the past three months, driven by worries about the impact of weight-loss drugs like Ozempic, the company’s Q3 results paint a different picture.
PepsiCo not only raised its full-year earnings outlook but also anticipates 2024 sales and earnings growth to align with its long-term targets. CEO Ramon Laguarta highlighted the “strength” and “resilience” in the company’s product categories.
This sentiment aligns with Constellation Brands CEO Bill Newlands’ recent statement, indicating that customer research shows no reduced appetite for beer due to Ozempic.
PepsiCo’s strong performance and optimistic outlook suggest that the company does not anticipate a negative impact on its profits from Ozempic or similar drugs. The management’s track record of not surprising investors negatively adds further confidence to this outlook.
In conclusion, PepsiCo’s Q3 results challenge concerns about the influence of weight-loss drugs on its business, reaffirming its position as a resilient industry leader.