PepsiCo (PEP, $110.71) Third Quarter Performance Beats Analysts' Expectations
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.
