01—Abstract
Summary
Summary of the 10-Q filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
PepsiCo Inc. reported solid financial results for the first quarter of fiscal year 2024, with net revenue increasing by 2% to $18.25 billiona and operating profit rising by 3% to $2.72 billion compared to the same period last year.
This growth was driven by effective net pricing strategies across its divisions, particularly in Latin America and Europe, which more than offset a slight decline in organic volume globally. A significant factor impacting profitability was the voluntary recall of certain Quaker products, which resulted in an $167 millionb charge and negatively affected the Quaker Foods North America (QFNA) segment's operating profit.
Despite this, the company demonstrated resilience, with strong performance in international segments like Latin America and Europe contributing positively to overall results. Management's focus on productivity savings and strategic pricing actions are key to navigating cost pressures and maintaining margin expansion.
02—Key points
Key Highlights
- Net revenue increased by 2.0% to $18.25 billion, while operating profit grew by 3.0% to $2.72 billion year-over-year.
- Effective net pricing was a key driver of revenue growth, contributing 5% to organic revenue growth globally, offsetting a 2% decline in organic volume.
- The Quaker Foods North America (QFNA) segment experienced a significant 24% revenue decline and a 126% operating profit decline, heavily impacted by a $167 million product recall charge.
- International segments showed robust growth, with Latin America up 16% and Europe up 3% in net revenue, driven by strong pricing and volume improvements in most markets.
- PepsiCo declared a quarterly dividend of $1.265 per share, an increase from the prior year, and plans to return approximately $8.2 billion to shareholders in 2024 through dividends and share repurchases.
- The company's balance sheet remains strong, with total assets of $100.04 billion and total liabilities of $80.85 billion as of March 23, 2024.
- Cash flow from operations was a net cash used of $1.04 billion, significantly impacted by unfavorable working capital movements, leading to a negative free cash flow of $1.65 billion for the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Pepsico Inc kept $0.11.
- Revenue$18.25B100.0%
- Cost of revenue−$8.25B45.2%
- Gross profit$10.00B54.8%
- Operating costs−$7.29B39.9%
- Operating income$2.72B14.9%
- Interest, other & tax−$675.0M3.7%
- Net income$2.04B11.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 23, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $18.25B$17.85B | +2.3% |
| Cost of Revenue | $8.25B$7.99B | +3.3% |
| Gross Profit | $10.00B$9.86B | +1.5% |
| SG&A Expenses | $7.29B$7.23B | +0.8% |
| Operating Income | $2.72B$2.63B | +3.3% |
| Interest Expense | $202.00M$200.00M | +1.0% |
| Net Income | $2.04B$1.93B | +5.7% |
| EPS (Basic) | $1.49$1.40 | +6.4% |
| EPS (Diluted) | $1.48$1.40 | +5.7% |
| Shares Outstanding (Basic) | 1.38B1.38B | −0.2% |
| Shares Outstanding (Diluted) | 1.38B1.38B | −0.3% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the first quarter?
Revenue growth was primarily driven by effective net pricing across most divisions, which contributed 5% to organic revenue growth. This helped offset a 2% decline in organic volume.
How did the Quaker product recall impact the company's financials?
The voluntary recall of certain Quaker products resulted in a $167 million charge, significantly impacting the Quaker Foods North America (QFNA) segment. This led to a substantial decrease in QFNA's revenue and operating profit for the quarter.
What is the outlook for shareholder returns?
PepsiCo plans to return approximately $8.2 billion to shareholders in 2024, comprising an anticipated $7.2 billion in dividends and $1.0 billion in share repurchases. The company recently announced a 7% increase in its annualized dividend to $5.42 per share.
How is the company managing supply chain and commodity cost pressures?
PepsiCo is managing these pressures through effective net pricing strategies, productivity savings, and hedging activities for commodity prices. However, some operating cost increases, particularly in transportation and labor, are noted as continuing challenges.
06—Continue