24.07.2013 15:29:29

PepsiCo Q2 Results Top Estimates, Backs Full Year View

(RTTNews) - Food and beverage giant PepsiCo, Inc. (PEP) Wednesday reported higher profit for the second quarter as disciplined pricing help improve margins. Both earnings and revenue topped Wall Street estimates. The company backed its full year forecast.

Chairman and CEO Indra Nooyi said, ''We're pleased with our performance in the second quarter and for the first half of 2013. PepsiCo delivered another quarter of mid-single-digit organic revenue growth, driven by our balanced food and beverage product portfolio and global geographic footprint.''

Indra Nooyi added that the company maintained disciplined, balanced pricing in the quarter, which, together with its productivity initiatives, translated to healthy margin improvement. PepsiCo increased gross margins and operating margins by more than 100 basis points in the period.

Larger rival Coca-Cola Co. (KO) last week reported lower profit for the second quarter, as revenues declined amid slowness in some economies as well as wet and cold weather conditions.

PepsiCo's net income attributable to the company for the second quarter increased to $2.01 billion or $1.28 per share from $1.49 billion or $0.94 per share last year.

Core earnings were $1.31 per share, while it totaled $1.12 per share last year. On average, 16 analysts polled by Thomson Reuters expected earnings per share of $1.19 for the quarter. Analysts' estimates typically exclude one-time items.

Core earnings include a $0.09 per share gain related to refranchising the company's bottling operations in Vietnam, partially offset by a $0.02 impact from incremental investments. It excludes a net impact of $0.02 per share related to mark-to-market losses on commodity hedges, and a $0.01 impact from restructuring and integration charges.

Net revenue rose 2 percent to $16.81 billion from $16.46 billion a year earlier. Analysts estimated revenues of $16.79 billion for the quarter.

Organic revenue growth was 4.2 percent. Structural changes, mainly the refranchising of the company's beverage operations in Vietnam and China, hurt reported net revenue by nearly 1 percentage point and foreign exchange translation had a 1.5-percentage-point unfavorable impact.

Snacks volume grew 3 percent while Beverages volume was up 5 percent.

Sales improved 5 percent in PepsiCo Americas Foods to $6.025 billion with a 4 percent growth in Frito-Lay North America and a 9 percent increase in Latin America Foods even as revenue from Quaker Foods North America slid 1 percent. Revenue slid 2 percent in PepsiCo Americas Beverages to $5.26 billion, reflecting a 0.5-percentage-point impact of unfavorable foreign exchange translation..

Europe revenues were 1 percent higher while Asia, Middle East & Africa saw a 6 percent increase. Looking ahead to 2013, the company still expects 7 percent core constant currency earnings per share growth compared to its fiscal 2012 core earnings per share of $4.10.

Excluding the impact of structural changes and foreign exchange translation, organic revenue is expected to grow mid-single digits, in line with the company's long-term targets.

The company said it is on track to deliver targeted $900 million of productivity savings during 2013 and $3 billion in productivity savings in 2012 through 2014.

PepsiCo also expects to return $6.4 billion to shareholders in 2013 through $3.4 billion in dividends and $3.0 billion in share repurchases.

PEP, which closed at $86.20 on Tuesday, is up 0.7 percent in pre-market activity.

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