PepsiCo is not seeing the impact of weight-loss drugs on sales: CFO Johnston

PepsiCo Inc (NASDAQ:PEP) opened slightly down on Tuesday even though it reported market-beating results for its fiscal third quarter.

PepsiCo also issued solid guidance

The price action is particularly interesting considering the beverage giant issued upbeat guidance for the future as well.

PepsiCo now forecast a 13% annualised growth in its core EPS to $7.54 this year. It also reiterated its previous outlook for a 10% increase organic revenue in fiscal 2023. On CNBC’s “Squawk Box”, Hugh Johnston – the Chief Financial Officer of PepsiCo said today:

I think as a company we’re executing better and better as we reinvest back into the business. There’s a lot of good innovation going on there. It really is good broad-based strength right now.

The multinational saw beverage and food sales jump 8.0% and 9.0% globally in its recently concluded quarter. The finance chief also said that spending on advertising and marketing was paying off well.

Why is PepsiCo stock struggling for months?

On Tuesday, PepsiCo also improved its guidance for fiscal 2024. It now expects close to a 6.0% growth in organic sales and a high-single-digit percentage increase in adjusted earnings next year.

At writing, PepsiCo shares are down 18% versus their year-to-date high. According to CFO Johnston:

I think it’s interest rates. To some degree, it’s dollar strength. Now that 10-year is at 4.0% to 5.0%, there’s more alternative investments. But you don’t get growth with those that you get with us.

Wall Street currently has a consensus “overweight” rating on the food and beverage stock.

Notable figures in PepsiCo Q3 earnings release

• Earned $3.09 billion versus the year-ago $2.70 billion
• Per-share earnings also climbed from $1.95 to $2.24
• Adjusted EPS printed at $2.25 as per the press release
• Net sales went up 6.7% year-on-year to $23.45 billion
• Consensus was $2.15 a share on $23.41 billion revenue

The earnings report arrives only days after Walmart cited weight-loss drugs as it reported a decline in sales of food and beverages that are high in calories.

But PepsiCo finance chief Johnston confirmed today:

We’re studying it closely, but we don’t see it at all in our numbers. Zero at this point. I think it’ll get adopted pretty slowly and that’ll give us time to evolve our portfolio.

Lastly, Hugh Johnston confirmed that PepsiCo consumer was still keeping resilient in the wake of rising oil prices.

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