PEPSICO INC (PEP) Q4 2024 Earnings Summary

Executive Summary

Q4 2024 revenue was $27.78B (-0.2% YoY) and Core EPS was $1.96 (+10% YoY), supported by margin expansion and strong international performance; GAAP EPS was $1.11 (+17% YoY) as PBNA absorbed impairment related to the Tropicana Brands Group investment and Juice Transaction receivables .
2025 outlook: low-single-digit organic revenue growth and mid-single-digit Core constant-currency EPS growth, with ~3ppt FX headwind; core tax rate ~20%; total cash returns expected at ~$8.6B (dividends $7.6B; buybacks $1.0B) .
Dividend raised 5% to $5.69 annualized beginning June 2025 (53rd consecutive annual increase), following a separate declaration of $1.355 per share payable Mar 31, 2025; dividend cadence remains a key capital returns pillar .
Near-term U.S. snacks softness (FLNA volumes down; OP -11% YoY) reflects value-seeking consumers and deliberate reinvestment; management highlighted targeted price-pack architecture and “positive choices” innovation to reaccelerate growth in 2025, with international a continuing growth/margin lever .

What Went Well and What Went Wrong

What Went Well
- International strength and profitability: Europe Core constant-currency OP +41% in Q4; AMESA +57% in Q4; APAC/ANZ/China +14% in Q4; full-year Europe OP +163% (lapping SodaStream impairments) .
- Margin expansion despite muted topline: Q4 Core gross margin +23 bps YoY; Q4 Core operating margin +102 bps YoY; FY Core operating margin +83 bps .
- Shareholder returns and confidence: 2025 plan for ~$8.6B returns and 5% dividend raise underscores cash generation and capital discipline .
What Went Wrong
- FLNA softness and reinvestment: Q4 FLNA OP -11% (restructuring +5ppt headwind), with lower organic volume; management is prioritizing value packs, portion control, and away-from-home infrastructure to reignite volume .
- PBNA impairment drove optics: PBNA Q4 OP swung to a $(109)M loss due to impairment and other charges tied to TBG and the Juice Transaction; Core OP remained positive on pricing and productivity .
- Latin America indirect tax: Q4 LATAM OP -25% including a 31ppt indirect tax reserve; FX also weighed (14ppt) despite effective net pricing and productivity .

Financial Results

Headline results vs prior year and prior quarter

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($B)	$27.85	$23.32	$27.78
GAAP Diluted EPS	$0.94	$2.13	$1.11
Core EPS (non-GAAP)	$1.78	$2.31	$1.96

Segment revenue and operating profit (Q4)

Division	Revenue Q4 2023 ($B)	Revenue Q4 2024 ($B)	OP Q4 2023 ($M)	OP Q4 2024 ($M)
Frito-Lay North America	$7.47	$7.32	$1,840	$1,647
Quaker Foods North America	$0.89	$0.87	$40	$170
PepsiCo Beverages North America	$7.91	$7.91	$408	$(109)
Latin America	$3.97	$3.69	$703	$528
Europe	$4.22	$4.48	$(439)	$469
AMESA	$1.94	$2.03	$151	$208
APAC/ANZ/China	$1.45	$1.48	$24	$93
Total	$27.85	$27.78	$1,683	$2,250

Q4 organic revenue and volume (non-GAAP)

Division	Organic Revenue % (Q4)	Organic Volume % (Q4)
Frito-Lay North America	(2)%	(3)%
Quaker Foods North America	(2)%	(6)%
PepsiCo Beverages North America	0%	(3)%
Latin America	+4%	~0%
Europe	+7%	+2%
AMESA	+14%	+3%
APAC/ANZ/China	+1%	+5%
Total	+2%	(1)%

Margins (YoY performance change)

Metric	Q4 2024 YoY Change	FY 2024 YoY Change
Core Gross Margin (bps)	+23 bps	+72 bps
Core Operating Margin (bps)	+102 bps	+83 bps

Non-GAAP EPS bridge (Q4)

Item	EPS Impact
GAAP Diluted EPS	$1.11
+ Restructuring & impairment	+$0.17
+ Impairment & other charges	+$0.38
+ Indirect tax impact	+$0.16
+ Pension/retiree medical	+$0.15
+ Acquisition/divestiture	+$0.01
+/− Mark-to-market	(−$0.02)
Core EPS	$1.96

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Revenue Growth	FY 2025	N/A	Low-single-digit increase	New
Core EPS Growth (cc)	FY 2025	N/A	Mid-single-digit increase	New
Core Annual Effective Tax Rate	FY 2025	N/A	~20%	New
FX Translation Impact	FY 2025	N/A	~3ppt headwind on reported revenue and Core EPS	New
Total Cash Returns	FY 2025	~$8.2B (2024 guide)	~$8.6B ($7.6B dividends; $1.0B buybacks)	Raised
Annual Dividend	From June 2025	$5.42 (2024)	$5.69 (+5%)	Raised

Note: Company states FY25 Core EPS growth is mid-single-digit in constant currency; with ~3ppt FX headwind, implied reported Core EPS growth is low-single-digit versus FY24 Core EPS of $8.16 .

Earnings Call Themes & Trends

Topic	Q2 2024 (prior-2)	Q3 2024 (prior-1)	Q4 2024 (current)	Trend
U.S. Snacks (FLNA) value/volume	Emphasis on targeted value and A&M to restore volume; “consumer more price-conscious”; away-from-home focus	Value levers (bonus packs, Tostitos/Doritos brand events), “positive choices” portfolio; category-wide softness, affordability headwinds	Continued reinvestment; surgical price-pack architecture, portion control, away-from-home buildout; category volumes showing early improvement	Stabilizing with targeted value; execution focus
PBNA profitability and growth	Margin expansion in PBNA, innovation in functional hydration, Zero growth; better service levels	March to mid-teens PBNA margin maintained; portfolio and execution improvements	Mid-teens PBNA margin aspiration reiterated; energy a strategic pillar; Baja Blast expansion	Margin roadmap intact; energy and flavors/Zero
International growth	International as major growth engine; investments continue	Growth resilient; some geopolitics/consumer softness; beverages outpacing foods	~$40B international business accretive; strong Europe; AMESA FX/commodity pressure	Structural growth driver; mix/margin support
Health/“positive choices”	Portion control, permissible snacks, Zero-sugar beverages; long-term shift	Positive Choices scale; democratizing healthier options	Pivoting A&M to permissible offerings; portion control core to strategy	Sustained portfolio evolution
GLP-1 impact	Minimal direct impact; broader value-conscious behavior dominates	Not highlighted	Minimal observed impact; monitor health/wellness narrative	Low direct impact; messaging persists
Restructuring/Org design	Not highlighted	Realignment to focus international franchise beverages vs. foods; U.S. harmonization in technology/infrastructure	Same themes reiterated; productivity funds reinvestment	Productivity-enabled reinvestment

Management Commentary

“We expect to deliver low-single-digit organic revenue growth and mid-single-digit core constant currency EPS growth in 2025… We also announced a 5 percent increase in our annualized dividend per share beginning with the June 2025 payment” (R. Laguarta) .
On FLNA reinvestment: “We’re going to continue to invest… we reinvested most of the one-time gains in Q4 to get us off to a good start in 2025” (J. Caulfield; R. Laguarta) .
On pricing/value: “I wouldn’t assume… negative pricing… more surgical price-pack strategy that drives growth” (R. Laguarta) .
On PBNA/energy: “Energy remains a fundamental part of our beverage growth strategy in the U.S.” (R. Laguarta) .
On long-term growth: “We see our long-term organic sales growth at 4% to 6% and remain committed to translating that into high single-digit EPS” (R. Laguarta) .

Q&A Highlights

FLNA strategy and ROI: Investments funded by productivity and non-operating gains; focus on affordability (price partitions), portion control, and away-from-home to reignite category volume; early signs of stabilization .
Pricing posture: No intent for broad price rollbacks; surgical pack/price architecture to protect category economics while improving value accessibility .
EPS guide drivers: FX (~3.4x “set” with peso headwind), higher net interest from refinancings and higher debt (CFA, Sabra), higher pension expense; sector OP growth should exceed EPS growth in 2025 (J. Caulfield) .
Energy/Mountain Dew: Energy remains a growth pillar; Baja Blast now scaled (~$1B franchise retail + AFH), with Super Bowl and full-year plans to drive Gen Z penetration .
GLP-1: Minimal direct impact observed; broader health/wellness awareness addressed via portion control and “positive choices” portfolio .

Estimates Context

We attempted to retrieve S&P Global consensus estimates (EPS, revenue) for Q4 2024 and prior quarters, but access hit the provider’s daily rate limit, so consensus comparisons are unavailable. As a result, we cannot provide vs-consensus beat/miss analysis for this quarter (S&P Global request limit exceeded).

Key Takeaways for Investors

2025 set-up is deliberately conservative on topline amid FX and macro, but productivity-driven reinvestment, international scale, and a disciplined value architecture should support Core EPS growth even with FX headwinds .
International remains the structural growth and margin lever; Europe’s turnaround (lapping impairments) and AMESA/APAC productivity leave room for further operating leverage .
North America snacks is the swing factor: execution of price-pack architecture, portion control, and “positive choices” innovation is critical to volume recovery; watch sequential FLNA volumes and elasticities in H1 2025 .
PBNA’s margin-improvement path and selective innovation (functional hydration, Zero sugar, energy, Baja Blast) provide portfolio diversification and earnings resilience .
Capital returns remain robust with a 5% dividend increase and ~$8.6B expected total returns in 2025; cash generation supports reinvestment and shareholder payouts .
Monitor non-GAAP adjustment cadence (restructuring, impairments, tax items) and FX translation (~3ppt headwind) to bridge Core to reported performance .
Without consensus comparisons this quarter, trading catalysts hinge on confidence in FLNA volume inflection, PBNA margin trajectory, and confirmation of international strength into 1H25 through intra-quarter updates .

Appendix: Additional Data Points

Q4 reported net revenue: $27.78B; FX translation headwind ~2% to revenue in quarter .
Q4 Core EPS $1.96 vs $1.78 prior year; Core constant-currency EPS +14% YoY in Q4 .
FY 2024 Core EPS $8.16 vs $7.62 in 2023; Core constant-currency EPS +9% .
Cash from operations FY 2024: $12.51B; capex $5.32B; dividends paid $7.23B; buybacks $1.0B .