01—Abstract
Summary
Summary of the 10-Q filed October 8, 2024. Cited figures are marked; the original filing is the authoritative source.
PepsiCo, Inc. reported financial results for the 12 and 36 weeks ended September 7, 2024.
For the 12-week period, net revenue saw a slight decrease of 1%a, while operating profit declined by 4%. This was primarily attributed to increased operating costs, a decline in organic volume, and higher restructuring charges, partially offset by effective net pricing and productivity savings. The 36-week period presented a more positive picture, with net revenue increasing by 1% and operating profit growing by 3%, driven by effective net pricing and productivity savings, despite some operating cost increases and a decline in organic volume.
Net income attributable to PepsiCo for the 12-week period decreased by 5% to $2.93 billionb, resulting in diluted EPS of $2.13. However, for the 36-week period, net income increased by 4% to $8.06 billion, with diluted EPS at $5.84.
The company highlighted operational challenges and strategic investments, particularly the impact of the Quaker Recall in the Quaker Foods North America division, which significantly affected its performance in the 36-week period. Despite these headwinds, PepsiCo demonstrated resilience through effective pricing strategies and ongoing productivity initiatives.
02—Key points
Key Highlights
- For the 12 weeks ended September 7, 2024, net revenue decreased by 1% to $23.3 billion, while operating profit decreased by 4% to $3.9 billion.
- For the 36 weeks ended September 7, 2024, net revenue increased by 1% to $64.1 billion, and operating profit increased by 3% to $10.6 billion.
- Net income attributable to PepsiCo for the 12-week period decreased by 5% to $2.93 billion ($2.13 diluted EPS), while for the 36-week period, it increased by 4% to $8.06 billion ($5.84 diluted EPS).
- The Quaker Foods North America (QFNA) division experienced a significant 18% net revenue decline in the 36-week period, largely due to a voluntary recall of certain bars and cereals.
- Operating profit in the Frito-Lay North America (FLNA) division saw a 9% decrease in the 12-week period and a 5% decrease in the 36-week period, attributed to operating costs and volume declines.
- PepsiCo generated $6.2 billion in net cash from operating activities for the 36-week period, a decrease from $7.6 billion in the prior year, resulting in free cash flow of $3.5 billion.
- The company repurchased $0.76 billion of stock and paid $5.37 billion in dividends during the 36-week period, underscoring its commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Pepsico Inc kept $0.13.
- Revenue$23.32B100.0%
- Cost of revenue−$10.40B44.6%
- Gross profit$12.92B55.4%
- Operating costs−$9.05B38.8%
- Operating income$3.87B16.6%
- Interest, other & tax−$942.0M4.0%
- Net income$2.93B12.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 8, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $23.32B$23.45B | −0.6% |
| Cost of Revenue | $10.40B$10.68B | −2.6% |
| Gross Profit | $12.92B$12.78B | +1.1% |
| SG&A Expenses | $9.03B$8.76B | +3.0% |
| Operating Income | $3.87B$4.01B | −3.6% |
| Interest Expense | $219.00M$201.00M | +9.0% |
| Net Income | $2.93B$3.09B | −5.2% |
| EPS (Basic) | $2.13$2.25 | −5.3% |
| EPS (Diluted) | $2.13$2.24 | −4.9% |
| Shares Outstanding (Basic) | 1.37B1.38B | −0.2% |
| Shares Outstanding (Diluted) | 1.38B1.38B | −0.4% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decline in net revenue for the 12-week period?
The primary driver for the 1% decrease in net revenue for the 12-week period was a combination of increased operating costs, a decline in organic volume, and higher restructuring charges. These factors were partially offset by effective net pricing and productivity savings.
How significantly did the Quaker Recall impact the company's financial results?
The Quaker Recall had a material impact, particularly on the Quaker Foods North America (QFNA) division. For the 36-week period, QFNA's net revenue decreased by 18%, and operating profit decreased by 71%, with a 40-percentage-point impact from the recall charges.
What is the company's outlook on returning capital to shareholders?
PepsiCo remains committed to returning capital to shareholders. For the 36-week period, the company paid $5.37 billion in dividends and repurchased $0.76 billion of its stock. For the full year 2024, it expects to return approximately $8.2 billion, comprising $7.2 billion in dividends and $1.0 billion in share repurchases.
How did foreign exchange rates affect the company's results?
Unfavorable foreign exchange movements had a negative impact on net revenue in certain regions. For instance, in the 12 weeks ended September 7, 2024, unfavorable foreign exchange negatively impacted net revenue performance by 2 percentage points, primarily due to declines in the Egyptian pound, Mexican peso, and Brazilian real.
06—Continue