PepsiCo earnings top estimates even as beverage sales disappoint

PepsiCo earnings top estimates even as beverage sales disappoint


PepsiCo third-quarter earnings topped Wall Street expectations, despite weak sales at its North American beverage business, which led to a miss on the top line.

While Pepsi expects its business is on track to exceed full-year earnings targets, the company moderated expectations for full-year organic revenue growth.

The owner of Frito-Lay snacks and Pepsi cola reported third-quarter adjusted earnings of $1.48, beating expectations of $1.43 per share, according to Thomson Reuters.

Revenue was $16.24 billion versus an estimate of $16.31 billion. Organic revenue, which excludes the impacts of foreign exchange translation and structural changes, grew 1.7
percent.

Here’s what Pepsi reported, compared with what Wall Street was expecting, based on a Thomson Reuters survey of analysts:

  • Earnings of $1.48 a share, adjusted, beating expectations.
  • Revenue was $16.24 billion versus an estimate of $16.31 billion.

The Purchase, New York-based company trimmed its full year revenue growth target to 2.4 percent from a prior estimate of at least 3 percent.

“Overall, our businesses performed well in the third quarter in what continues to be a challenging
environment,” said Chairman and CEO Indra Nooyi. “Each of our operating sectors delivered results in line with or ahead of our expectations, with the exception of North America Beverages where revenues declined following two consecutive years of very strong third-quarter growth.

The North American beverage business, which includes Mountain Dew and Gatorade, generated revenue of $5.33 billion in the third quarter, compared to $5.52 billion the same period the year prior. The the U.S. beverage business has become increasingly competitive as upstart brands like Bai have increased their market share.

Pepsi attributed its revenue struggles to a shift in media spending and shelf space allocation and weaker performance of its sports drink Gatorade. The decline, which comes after two consecutive years of very strong third-quarter growth is “temporary and not structural,” Pepsi said.



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