PepsiCo's profit beats estimates, but Quaker recalls weigh on earnings
By Steve Gelsi
Stock down after Quaker Oats unit posts a loss on product recalls.
PepsiCo Inc.'s stock fell 2.3% on Tuesday after the soft drink and salty snack giant beat Wall Street's first-quarter profit and revenue estimates but said its Quaker Oats unit swung to a loss on product recalls.
Pepsi's (PEP) Chief Executive Ramon Laguarta said the company faced the impact at Quaker Oats as well as a "difficult" revenue-growth comparison from the year-ago period, but overall its business "remained agile and performed well" - particularly in its international units.
Pepsi also reiterated its 2024 profit outlook, but said its adjusted earnings for the year could fall slightly short of forecasts.
PepsiCo said its earnings for the three months ending March 23 rose to $2.04 billion, or $1.48 a share, from $1.93 billion, or $1.40 a share in the year-ago period.
Adjusted earnings were $1.61 a share, ahead of the FactSet consensus estimate of $1.52 a share.
First-quarter revenue rose to $18.25 billion from $17.85 billion, above the analyst estimate of $18.08 billion.
Looking ahead, Pepsi expects 2024 adjusted earnings of at least $8.15 a share, a penny below the consensus estimate of $8.16 per share.
Pepsi initially announced the voluntary recall of Quaker Oats Chewy Bars and Simply Granola serials in December, due to concerns over potential salmonella.
In January, Pepsi added two dozen additional types of granola bars, cereals and snack foods to the recall over possible salmonella contamination.
On Tuesday, Pepsi said its Quaker Oats unit swung to a loss of $49 million from a year-ago profit of $188 million.
Revenue at Quaker Oats fell to $593 million from $777 million in the year-ago period.
Ahead of Tuesday's trades, Pepsi's stock was up by 3.9% in 2024, compared to a 5.1% gain by the S&P 500 SPX.
-Steve Gelsi
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04-23-24 0950ET
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