PepsiCo Q4 Results Beat Estimates

(RTTNews) - Food and beverages giant PepsiCo, Inc. (PEP) Wednesday said fourth-quarter profit declined from the previous year, hit by items and adverse currency. Both adjusted earnings and revenues topped Wall Street estimates. The stock gained around 3 percent in pre-market activity.

Attributable net income plunged 25 percent to $1.31 billion from $1.74 billion in the previous year. Earnings per share fell to $0.87 from $1.12.

The latest results included a negative net impact of $0.08 per share from restructuring and impairment charges, $0.07 per share related to the re-measurement of some net monetary assets of the company's Venezuelan entities, $0.06 per share related to a pension lump sum settlement charge and $0.04 per share related to mark-to-market net losses on commodity hedges.

On an adjusted basis, core earnings per share was $1.12, while it totaled $1.05 last year. On average, 21 analysts polled by Thomson Reuters expected earnings of $1.08 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenue slipped to $19.948 billion from $20.12 billion in the previous year. Analysts expected revenues of $19.66 billion.

Foreign exchange translation had over a 6-percentage-point unfavorable impact on reported net revenue. Organic revenue grew 5 percent in the just concluded quarter.

In Frito-Lay North America or FLNA, organic revenue grew 3.5 percent at $4.37 billion, reflecting volume growth of 2 percent and 2 percentage points of effective net pricing.

For Quaker Foods North America or QFNA, organic revenue was even with the prior year at $784 million.

Latin America Foods or LAF recorded organic revenue growth of 11 percent at $2.80 billion, led by Venezuela, Argentina and Brazil.

Organic revenue increased 3 percent to $6.06 billion at PepsiCo Americas Beverages.

Revenue from Europe was $3.91 billion. This organic revenue increase of 6 percent reflected 3 percentage points of effective net pricing and volume growth of 3 percent in both snacks and beverages.

Asia, Middle East & Africa revenues totaled $2.02 billion, an organic growth of 7 percent. The company noted that organic revenue grew 10 percent in Developing and emerging market, but fell 4 percent on a reported basis, reflecting unfavorable foreign exchange translation, in particular, significant currency volatility in the Russian ruble and Venezuelan bolivar.

Chairman and CEO Indra Nooyi said, "As we look ahead to 2015, we expect to again deliver results consistent with our long-term financial objectives, despite the anticipated challenging and volatile global macro environment...we plan to return approximately $8.5 to $9 billion to shareholders through both higher dividends and share repurchases."

The company announced a 7.3 percent increase in its annualized dividend to $2.81 per share from $2.62 per share, to take effect with the dividend expected to be paid in June. The firm also anticipates share repurchases of $4.5 billion to $5 billion in 2015.

The company also announced a new share repurchase program providing for the repurchase of up to $12 billion of PepsiCo common stock commencing on July 1, 2015 and expiring on June 30, 2018.

PepsiCo expects a 7 percent core constant currency earnings per share growth in fiscal 2015, compared to its fiscal 2014 core earnings per share of $4.63, consistent with its long-term target of high-single-digit core constant currency earnings per share growth. Analysts look for full year earnings per share of $4.75.

Organic revenue in fiscal 2015 is expected to grow mid-single digits from 2014, consistent with the company's long-term target.

Peer Coca-Cola (KO) Tuesday announced earnings for the fourth quarter that dropped more than 50 percent from last year, hurt by unfavorable currency exchange and by costs associated with initiatives aimed at improving productivity. Ignoring the impact of currency exchange and structural items, the company's revenue grew 4 percent.

PEP closed up 2.1 percent at $97.99 on Tuesday, and was adding around 3 percent in pre-market activity.