(Reuters) – PepsiCo (NASDAQ:PEP) posted a surprise drop in third-quarter revenue on Tuesday and cut its forecast for annual sales growth, as it deals with cautious consumer spending in North America and fallout from the recall of Quaker Foods products.
The packaged food giant expects fiscal 2024 organic sales to grow in a low single-digit range. It had previously forecast a 4% rise.
Quarterly revenue was hurt by subdued trends in North America, the impact from Quaker recalls earlier this year and business disruptions due to rising geopolitical tensions in certain international markets, CEO Ramon Laguarta said.
Organic revenue in Quaker Foods North America segment slumped 13% during the quarter, following an 18% decline in the second quarter.
However, price increases and measures to drive efficiencies across its operations helped drive a 111 basis point (bps) growth in margins.
It also earned $2.31 per share on an adjusted basis, beating estimates of $2.29 per share, according to data compiled by LSEG.
“We continue to expect to deliver at least 8 percent core constant currency EPS growth as we will focus on tightly managing our costs to better align with the subdued growth environment that we are currently operating in,” Laguarta added.
Net revenue fell 0.6% to $23.32 billion in the quarter ended Sept. 7 from $23.45 billion last year. Analysts estimated a 1.3% jump to $23.76 billion.
Shares of the company fell about 1% in premarket trading.
