PepsiCo, Inc. reported earnings higher than expected, as new strategies for the North American market paid off, along with growing sales in emerging markets.
Excluding one-time items, the company raked in $1.59 per share earnings, beating analysts' estimates of $1.57 for the third quarter ending September 8. Total net income of $2.49 billion (or $1.75 per share) was up a whopping 16% from $2.14 billion (or $1.48 per share) a year earlier.
Net revenue increased 1.5 percent to $16.49 billion, which is higher than analysts' average projection of $16.36 billion.
By shifting its beverage portfolio more towards healthier options such as non-carbonated drinks and sparkling water (including its launch of brands Bubly and Lifewtr), Pepsi managed to revive sales in an increasingly health-conscious consumer segment of North America. The firm's beverage sales in the region grew 2.3% in the third-quarter, albeit missing analysts' average estimate of a 5% increase, according to Thomson Reuters.
Due to decreasing consumer preference for salty snacks, Pepsi’s Frito-Lay sales fell short of analysts' projections, but still managed to grow in the positive territory ( at 2.6%) in North America.
In the emerging markets, organic sales rose 10% in the quarter on the back of expanding marketing and new product launches in Mexico, India and China.
PepsiCo said it now projects its full-year organic revenue ( which excludes acquisitions and forex effects) to grow at least 3 percent, up from a prior forecast of 2.3% increase.