The US multinational beverage corporation PepsiCo Inc (PEP, Financial) came out with its second quarter financial results. The company’s earnings and revenue were strong during the quarter as robust sales in the Cheetos and salty snacks department more than offset the decline at soft drinks business.
By the numbers
PepsiCo reported second quarter earnings of $1.61 while revenue during the same period amounted to $16.09 billion, up 2.4% from the same period last year. The company’s organic revenue increased 2.6% during the quarter on a year over year basis.
The company posted net income of $1.82 billion or $1.28 per share, down from $2.2 billion or $1.46 per share reported in the year ago quarter.
Other details
The company saw robust performances in the majority of its businesses. As far as the Frito-Lay snack business is concerned, its sales spiked 4% owing to spectacular performance of brands like Doritos and Tostitos. As part of its efforts, the company declared in May that it would acquire Bare Foods, a baked fruit and vegetable company, to boost its snacks business. CEO of PepsiCo Indra Nooyi commented:
“The majority of our businesses performed very well, with particularly strong performances by Frito-Lay North America and each of the international sectors and NAB, North American Beverages posted another quarter of sequential improvement in both organic revenue and operating profit performance.”
The company saw its fourth successive quarters of market share growth as well as delivered mid single-digit retail sales growth in North America’s Quaker Food segment. The quarterly growth of this segment was attributable to a heavy advertisement campaign that focused on the benefits of oatmeal.
Outside North America, the company witnessed impressive organic growth of 3.5% in its developing and emerging market. While the company achieved 7% organic revenue growth in Europe and Sub-Saharan Africa in the second quarter, a combined 6% organic revenue growth was achieved in Asia, Middle East and North America. Owing to active market and stable macro conditions, the company was able to generate growth in the international markets except Brazil, where its growth was adversely impacted due to an 11-day transportation strike in Brazil.
Last word
Soaring commodity and transportation costs remain an area of concern for the company; something that has hurt the company’s beverage business as well as Quaker foods.
Looking ahead, the company projects free cash flow of roughly $6 billion for 2018. As a matter of fact, the company sees organic growth for the year of 2.3%. Core earnings per share are estimated to be $5.70 for the year. The company also affirms proper capital investment this year with sensible reinvestment into the business.
Disclosure: I do not hold any position in the stock mentioned in this article.
