(Bloomberg) -- PepsiCo Inc. trimmed its revenue outlook for the year as cash-strapped consumers, boycotts in the Middle East and a major recall hit volumes of its food and beverages.
Full-year organic revenue is now expected to rise by a low single-digit percentage, the company said in a statement on Tuesday. That’s down from PepsiCo’s previous target of 4%. Volumes for most divisions slipped in the third quarter, which led to organic revenue growth of 1.3%, below analyst estimates.
PepsiCo, which makes Lay’s potato chips and Lipton teas, is struggling as higher prices across the economy have caused consumers to rein in spending or switch to cheaper store-branded options. The company expects inflation to moderate, but consumers “to remain value conscious,” it said Tuesday in separate commentary on the results.
Related: Analysts Respond to PepsiCo’s Lower Guidance
PepsiCo “will focus on tightly managing our costs to better align with the subdued growth environment that we are currently operating in,” Chief Executive Officer Ramón Laguarta said in a statement.
He also cited “business disruptions due to rising geopolitical tensions in certain international markets,” as boycotts in the Middle East continue to impact American brands. The company continues to suffer setbacks related to the Quaker Oats recall late last year.
Still, PepsiCo saw modest volume growth for its convenient foods divisions in Europe and Asia Pacific.
The shares rose 1% at 10:11 a.m. in New York trading. The stock declined about 2% this year through Monday’s close, versus an increase of about 20% in the S&P 500 Index during that time.
The company still expects earnings to grow by at least 8% this year on a constant currency basis, Laguarta said. Core earnings per share rose 5% to $2.31 in the third quarter from a year earlier on a constant currency basis.
(Updates share trading in seventh paragraph)
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