PepsiCo Beats Analyst Expectations On North American Drinks Rebound
PepsiCo Inc posted a stronger-than-expected profit on Tuesday, boosted by beverage sales in North America that rose after a year of declines and as investments in marketing and developing new products for emerging markets paid off.
Shares of the company were up nearly 1% in early trading.
The sales rebound in North America came as PepsiCo expanded its portfolio with more non-carbonated drinks and sparkling water, launching brands such as Lifewtr and Bubly, while adding healthier options to its sports drink line Gatorade.
The company also boosted advertising behind its trademark colas - Pepsi, Diet Pepsi and Pepsi Zero - to claw back market share from larger rival Coca-Cola Co Inc.
North America beverage sales rose 2.3% in the third quarter ended Sept. 8, but were short of analysts' average estimate of a 5% increase, according to Thomson Reuters I/B/E/S.
Frito-Lay, the company's snack division, saw sales rise 2.6% in North America.
Faced with lagging demand for sugary sodas and salty snacks in its home market, PepsiCo has over the years shifted to building scale in emerging markets, where organic sales rose 10% in the quarter, helped by marketing and new product launches in Mexico, India and China.
"We continued to see a very strong operating performance from our international divisions, propelled by developing and emerging markets," Indra Nooyi said in a statement.
Nooyi will step down as Pepsi's chief executive officer on Wednesday, handing the reins to company President Ramon Laguarta. She will stay on as chairman until early 2019.
PepsiCo said it now expects its full-year organic revenue, which excludes acquisitions and forex impact, to grow at least 3%, up from a prior forecast of a 2.3% rise.
The company, however, expects a stronger dollar to hit full-year core earnings per share by one percentage point.
Net income attributable to the company rose to $2.50 billion, or $1.75 per share, in the third quarter, from $2.14 billion, or $1.49 per share, a year earlier.
Excluding one-time items, the company earned $1.59 per share, beating analysts' estimates of $1.57.
Net revenue rose 1.5% to $16.49 billion. Analysts on average had expected revenue of $16.36 billion.