PepsiCo Shares Rise Post-Earnings: What You Need to Know

Earnings and revenue beat projections, organic sales up year over year

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Mayank Marwah
Apr 15, 2021
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PepsiCo Inc. (

PEP, Financial) released its first-quarter results before the opening bell on April 15.

The company's earnings and revenue both surpassed analysts' predictions. Shares surged 0.4% to $142.70 in pre-market trading following the news.

The key numbers

The food and beverage giant recorded adjusted earnings per share of $1.21 on $14.82 billion in revenue. Analysts were anticipating earnings of $1.12 on $14.55 billion in revenue.

Strong performance in the North America Quaker Foods and Frito-Lay segments pushed the company's earnings past analysts' projections. Revenue also exceeded forecasts and rose year over year as more customers bought snacks and packaged foods amid the pandemic.

Stripping out the impact of acquisitions, divestitures and currency, organic sales inched up 2.4% in the reported quarter.

Chairman and CEO Ramon Laguarta had the following to say:

"We are pleased with our results for the first quarter as we successfully overcame challenges related to difficult year-over-year comparisons, uneven recoveries across many of our international markets and weather-related business disruptions in the U.S. Our results are indicative of the strength and resilience of our highly dedicated employees, diversified portfolio, agile supply chain and go-to-market systems and strong marketplace execution."

Segment performance

At PepsiCo North America beverages, organic sales surged 2%, driven by double-digit sales growth of the Bubly sparkling water brand, Lipton tea and Starbucks licenced products. The segment saw its operating profit increase 23%, while volume declined 3% on a year-over-year basis.

In the Frito-Lay segment, net revenue was up 4% in the reported quarter. Likewise, operating profit improved 3%. By contrast, volume plunged 1%.

Organic sales grew 1% at Quaker Foods North America as compared to the year-ago period, helped by a rise in demand for oatmeal. The segment's operating profit remained flat year over year, while volume declined 4%.

Revenue declined 5% in Latin America as compared to the prior-year quarter and 2% in Europe. Organic sales declined 1% in the Africa, Middle East and South Asia segment, while the Asia-Pacific, Australia and New Zealand and China segments witnessed 18% combined organic sales growth.

Looking forward

PepsiCo is looking to invest more in the online space as more customers are turning to the website to fulfil their food and beverage needs. The company said it will invest in its production capacity, go-to market systems and digital arena, such as enhancing its presence and scale in the e-commerce business. E-commerce brought in approximately $2 billion in retail sales in 2019.

PepsiCo has been investing in Pepsi Zero sugar in an effort to offset decline in the carbonated soft drink space and sugary drinks like soda. So far, the company's investment has paid off, given that Pepsi Zero Sugar has experienced year-to-date retail sales growth of more than 30%.

For 2021, the company expects core earnings per share to grow in the high single digits. PepsiCo anticipates organic sales to climb in the mid-single digits. Ramon said:

"Moving forward, we remain committed to supporting our employees, customers and communities. In addition, we will continue to focus on winning in the marketplace and investing to build competitive advantages that will enable us to become an even Faster, Stronger and Better organization."

Disclosure: I do not hold any positions in the stocks mentioned.

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A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.