PepsiCo Inc. (PEP, Financial) released its third-quarter earnings before the opening bell on Oct. 3. Strong performance in the Frito-Lay North America division and overseas market pushed earnings past analysts’ projections. Furthermore, spending more on marketing and advertising products helped push the company's revenue higher.Â
Snapshot of the quarter
The food and beverage giant recorded adjusted earnings of $1.56 per share on $17.19 billion in revenue. Analysts were anticipating earnings of $1.50 per share on $16.93 billion in revenue.
At the end of the quarter, the company had $5.49 billion in cash and cash equivalents and $29.63 billion in long-term debt.Â
“While adverse foreign exchange translation negatively impacted reported net revenue performance, organic revenue growth was 4.3% in the quarter,” Chairman and CEO Ramon Laguarta said. “We are making good progress against our strategic priorities and our businesses are performing well as we continue to make the necessary investments in our capabilities, brands, manufacturing and go-to-market capacity to propel our future growth.”
Segment details
PepsiCo's Frito-Lay North America division recorded 5% sales growth in the first quarter, while core operating profit advanced 6%. However, volumes dropped 1% at Quaker Foods North America and 1.5% at PepsiCo North America Beverages. Additionally, core operating profit declined 11% and 5% for the same businesses.
The company registered double-digit core operating profit growth in the overseas markets, namely Latin America (up 12% year over year) and Europe (up 14%).
Outlook
For full-year 2019, PepsiCo expects a roughly 1% decline in core constant currency earnings per share on the back of the anticipated rise in the core effective tax rate as well as progressive investments to strengthen the business. Core earnings are expected to be $5.50 per share, reflecting a 3% decline from the prior-year period due to the impact of foreign currency. The free cash flow guidance is about $5 billion, while operating cash flows are estimated to be approximately $9 billion. Capital spending is estimated to be $4.5 billion.
Disclosure: I do not hold any positions in the stocks mentioned in the article.
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