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What’s happening: Shares of PepsiCo rose on Wednesday, after the company released its results for the fourth quarter.
What happened: The leading beverage and snack maker missed sales expectations for the third quarter in a row.
Despite this, PepsiCo reported better-than-expected earnings for the fourth quarter.
How were the results: The Purchase, New York-based company reported a decline in sales for the quarter ended December 28.
Why it matters: Customers are still holding back their spending on soft drinks and snacks in the US, PepsiCo’s largest market. Fearing sticky inflation, customers are saving money for buying essential products. A slowdown in business forced PepsiCo to introduce promotions to trigger demand.
PepsiCo’s total organic volumes fell 1% in the quarter. Volumes at North America beverages and Frito-Lay North America, which are the company’s two biggest segments, fell 3% in the fourth quarter.
Net revenues from Frito-Lay North America fell 2% year-over-year, while revenues from Quaker Foods North America declined by 2% and sales from PepsiCo Beverages North America came in flat in the quarter.
Latin America sales dipped 7% year-over-year, while Europe sales grew by 6%.
The company’s gross profits slipped 1% year-over-year to $14.6 billion, while margins shrank 41 basis points to 52.6%.
“Our businesses remained resilient in 2024, despite subdued category performance trends in North America, the continued impacts related to a recall in our Quaker Foods North America division and business disruptions due to geopolitical tensions in certain international markets,” CEO Ramon Laguarta said.
Management guided to organic revenue growth in low-single digits and earnings growth in mid-single-digits for 2025. Pepsi raised its annualised dividend by 5% to $5.69 per share.
How shares responded: PepsiCo’s shares rose 1.5% to close at $145.66 on Wednesday, following the release of quarterly results. The stock has shed around 16% over the past six months.
What to watch: Investors will continue monitoring PepsiCo’s plans to grow sales, with the company planning significant investments to overhaul its current products and launch new items.
Context: Oil futures settled at their lowest level of the year, after data showed a weekly gain of around 9 million barrels in US crude inventories.
Details: The EIA (Energy Information Administration) said on Wednesday that crude oil inventories in the US rose by 8.664 million barrels during the week ended January 31. This marked the largest gain in almost a year and came in significantly higher than market estimates of 2.6 million.
Data also showed gasoline stockpiles rose by 2.233 million, higher than estimates of 1.2 million. Meanwhile, distillate stockpiles declined by 5.471 million barrels, much higher than the expectations of a 1.5 million draw.
Ongoing tensions between the US and China, after the Trump administration imposed 10% additional tariffs, also weighed on the oil market. In a retaliatory move, China announced tariffs on American oil, coal and LNG, triggering concerns around global oil demand.
WTI crude for March delivery declined $1.67, or 2.3%, to close at $71.03 per barrel on the NYMEX (New York Mercantile Exchange). April Brent crude fell $1.59, or 2.1%, to settle at $74.61 per barrel on ICE Futures Europe. Both standards of crude recorded their weakest settlements since December.
In other energy trading, March gasoline fell 2.3% to $2.05 a gallon, while March heating oil dipped 1.9% to $2.38 a gallon on Wednesday. Natural gas for March delivery bucked the trend and gained 3.3% to $3.36 per million British thermal units on Wednesday.
What to watch: Investors await the release of economic EIA data on the change in natural gas stockpiles (1930 UAE Time) today. US natural gas stockpiles, which declined by 321 billion cubic feet in the week ending January 24, is expected to fall by 167 billion cubic feet in the latest week.
The ongoing US-China trade tensions will also remain in focus.
Other Markets: US trading indices closed higher on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.71%, 0.39% and 0.42%, respectively.
Ukraine’s President Volodymyr Zelenskyy said he wanted Europe to be present during his talks with Russia’s President Vladimir Putin to end the ongoing war. The news sent the safe-haven US dollar index higher in forex trading this morning.
Vietnam’s annual inflation rate accelerated to 3.63% in January, from 2.94% in December, exerting pressure on the VND/USD forex pair.
Australia’s trade surplus on goods narrowed to A$5.09 billion in December, from A$6.79 billion surplus in the previous month. The latest reading missed market expectations of A$7 billion, which sent the AUD/USD pair lower in forex trading this morning.
Colombia’s producer prices rose by 7.67% year-over-year in January, from 7.33% in the previous month, which exerted pressure on the COP/USD forex pair.
Canada’s S&P Global services PMI rose to 49.0 in January, from 48.2 in the previous month. However, the region’s service activity contracting for the second month sent the CAD/USD pair lower in forex trading this morning.
Eurozone’s HCOB construction PMI (1230 UAE Time) and retail sales (1400 UAE Time), France’s HCOB construction PMI (1230 UAE Time), Germany’s HCOB construction PMI (1230 UAE Time), Italy’s HCOB construction PMI (1230 UAE Time), UK’s S&P Global construction PMI (1330 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), Mexico’s consumer confidence (1600 UAE Time) and interest rate decision (2300 UAE Time), UK’s BoE interest rate decision (1600 UAE Time), US Challenger job cuts (1630 UAE Time), initial jobless claims (1730 UAE Time), nonfarm productivity (1730 UAE Time), unit labour costs (1730 UAE Time) and continuing jobless claims (1730 UAE Time), as well as Canada’s Ivey PMI (1900 UAE Time).
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