PepsiCo recently unveiled its robust performance for the third quarter, surpassing market forecasts for both earnings per share and revenue. This positive outcome was significantly bolstered by the strong showing of its international segments and the revitalized growth in North American beverages. Looking ahead, the company is committed to strategic initiatives aimed at fostering accelerated growth and enhancing cost efficiency. A key leadership transition is also on the horizon, with a new Chief Financial Officer set to take the helm. Despite anticipating a marginal dip in core earnings per share for the upcoming year, the beverage giant projects substantial returns for its shareholders, signaling confidence in its long-term trajectory.
The company's strategic roadmap for the future centers on two critical pillars: aggressive cost optimization and a dynamic approach to product innovation. These efforts are designed to ensure sustainable growth and profitability in a competitive market landscape. Furthermore, the appointment of a new CFO underscores PepsiCo's dedication to strengthening its financial leadership and pursuing strategic objectives. This comprehensive strategy, combining fiscal prudence with forward-thinking product development, positions PepsiCo to navigate future challenges and capitalize on emerging opportunities.
Fiscal Performance and Growth Strategies
PepsiCo delivered a strong financial performance in the third quarter, with adjusted earnings per share reaching $2.29, surpassing the analyst consensus of $2.26. Quarterly sales also exceeded expectations, hitting $23.937 billion, a 2.6% increase year-over-year. This growth was attributed to the resilience of its international operations, improved performance in North America Beverages, and the positive impact of portfolio adjustments. While PepsiCo Foods North America (PFNA) and International Beverages Franchise (IB Franchise) sales remained stable, PepsiCo Beverages North America (PBNA) experienced a 2% growth. Notable regional gains included Latin America Foods (2% increase) and Europe, Middle East, and Africa (EMEA) with a 9% rise, along with a 2% increase in Asia Pacific sales. Despite a slight decrease in gross profit to $12.824 billion from $12.923 billion in the prior year, adjusted gross margin and operating margin saw minor contractions, settling at 53.9% and 17.3% respectively.
Chairman and CEO Ramon Laguarta emphasized the company's commitment to accelerating growth and significantly optimizing its cost structure moving forward. PepsiCo is actively developing a robust pipeline of innovative products to drive portfolio transformation. The company is also refining its pricing and packaging strategies to offer better value to consumers while simultaneously rightsizing its cost base to fund future strategic initiatives. This dual focus on innovation and cost discipline is expected to enhance efficiency and fuel sustainable growth. Despite these efforts, the company's non-GAAP guidance for 2025 forecasts low-single-digit organic revenue growth and core constant-currency EPS to remain largely flat year-over-year. The impact of foreign exchange translation is projected to be a 0.5-point headwind to reported net revenue and core EPS growth, an improvement from a previously anticipated 1.5-point headwind. Based on these assumptions, core EPS is implied to decline by 0.5% in 2025 compared to the $8.16 core EPS of 2024. Nevertheless, management projects substantial shareholder returns, including $7.6 billion in dividends and $1.0 billion in buybacks, totaling approximately $8.6 billion.
Strategic Leadership Transition and Future Vision
In a significant leadership development, PepsiCo announced the appointment of Steve Schmitt as Executive Vice President and Chief Financial Officer, effective November 10, 2025. Schmitt will succeed Jamie Caulfield, who is retiring after more than three decades with the company. This change in financial leadership is poised to bring fresh perspectives and strategic direction to PepsiCo's fiscal management. Schmitt brings extensive experience from Walmart Inc., where he served as EVP and CFO for Walmart U.S., overseeing the financial operations of its vast omni-channel business. His tenure at Walmart was marked by a strong focus on cost discipline and the successful implementation of digital transformation initiatives. Prior to his role at Walmart, Schmitt held various leadership positions at Yum! Brands, Inc., where he developed deep expertise in the quick-service restaurant and away-from-home business sectors, playing a crucial role in shaping long-term growth strategies.
The integration of Schmitt's expertise in driving cost efficiencies and digital transformation is expected to align well with PepsiCo's stated priorities of aggressively optimizing its cost structure and accelerating portfolio transformation. His background in diverse retail and food service environments will likely contribute to PepsiCo's efforts to refine its price-pack architecture and introduce innovative offerings that resonate with consumers. The company's proactive approach to leadership transitions, coupled with its clear strategic objectives, reflects a forward-looking vision aimed at maintaining its competitive edge and delivering consistent value to stakeholders. This leadership change is a pivotal step in PepsiCo's ongoing evolution, as it seeks to leverage new talent to navigate market dynamics and capitalize on opportunities for long-term success. The market responded positively to these announcements, with PEP shares trading higher in premarket activity, indicating investor confidence in the company's strategic direction and leadership changes.