PepsiCo’s Quaker Foods division experienced a first-quarter loss due to a product recall that led to the closure of a US granola bar and cereal factory in April. The US Food and Drug Administration issued a recall last December for over 40 Quaker Oats products due to salmonella concerns, which resulted in the permanent closure of the facility in Danville, Illinois by PepsiCo earlier this month.
Organic revenue for Quaker Foods North America declined by 24%, amounting to $593m, with an operating loss of $49m compared to a profit of $188m in the previous year’s first quarter. Chairman and CEO Ramon Laguarta mentioned plans to close the manufacturing facility involved in the recalls and resume production in the coming months to mitigate the financial impacts.
Meanwhile, the Frito-Lay North America division reported a decrease in operating profit, falling from $1.6bn to $1.55bn. Chief Financial Officer Jamie Caulfield highlighted the importance of margin improvement over time at Frito, emphasizing the need for sustainable growth through strategic investments.
In international markets, Latin America and Europe saw revenue gains of 8% and 10%, amounting to $2.07bn and $1.94bn respectively. Laguarta stressed the company’s ongoing investments in capacity expansion in key markets like Vietnam, China, India, Mexico, and Poland to drive growth.
Despite a demand slowdown in China, PepsiCo’s total net revenue increased to $18.3bn, with operating profit and net income also showing growth compared to the previous year. Laguarta expressed confidence in the company’s international businesses as a significant source of future growth.
The overall financial performance of PepsiCo reflected positive results amidst challenges in specific divisions and markets. The company’s focus on strategic investments and market expansion demonstrates a commitment to long-term sustainability and profitability.
