PepsiCo earnings miss estimates as North America demand weakens

PepsiCo reported weaker-than-expected quarterly earnings on Thursday as tighter consumer budgets weighed on demand in North America, even as international markets supported revenue growth.

The food and beverage giant posted adjusted earnings per share of $2.20 for the quarter ended June 13, slightly below analysts' expectations.

Revenue rose 6.4% year-on-year to $24.18 billion, beating market expectations. Organic revenue, which excludes acquisitions, divestitures and currency effects, increased 2.4%.

Net income attributable to PepsiCo climbed to $2.98 billion, or $2.18 per share, from $1.26 billion, or 92 cents per share, in the same period last year.

CEO Ramon Laguarta said results were held back as US food and beverage categories slowed while consumers faced tighter budgets due to inflationary pressures.

Global volumes were positive, with food volume up 3% and beverage volume rising 2%. However, growth was driven by international markets, while North American demand remained weak.

The company's North American food business reported flat volume, while its North American beverage division saw volume fall 4%.

PepsiCo has been under pressure in the US over the past two years as higher prices weighed on demand. Earlier this year, the company cut prices on several snack brands, including Lay's, Tostitos, Doritos and Cheetos, in an effort to regain consumers.

Chief Financial Officer Steve Schmitt said the North America business was softer than expected in the second quarter and that improvement in performance trends would likely be more gradual through the rest of the year.

The company reiterated its full-year forecast, expecting organic revenue growth of 2% to 4% and core constant-currency earnings per share growth of 4% to 6%.