PepsiCo reaffirmed its full-year outlook this morning (26 April) as the US snack maker delivered first-quarter earnings slightly ahead of market expectations.
Net earnings totalled US$1.32bn, an increase of 41% year-on-year, as the group benefitted from lower tax expenses and a 19% jump in operating profit. Core earnings per share of $0.94 came in just ahead of consensus analyst expectations of $0.92. Total earnings per share stood at $0.91 per share. During the quarter, to 25 March, PepsiCo lapped a one-time charge that dented the operating profit of its Asian reporting segment.
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The company registered a loss of $148m during the first quarter of 2016 at its Asia, Middle East and North Africa reporting unit due to a $373m impairment charge on the value of its shares in Asian drinks venture Tingyi-Asahi Beverages in the year-ago period. Segment operating profit at PepsiCo’s food businesses, excluding unallocated corporate expenses and the contribution from the group’s North American drinks unit, rose 27.5% in the period. Stripping out the AMENA region, food-based segment operating profit increased 2.2%.
Sales growth was led by Europe and sub-Saharan Africa, where revenue rose 7%. Sales from PepsiCo’s Frito-Lay North America and from its Latin American operations increased 2.4% and 3.4% respectively, offsetting lower sales at the group’s Quaker Foods North America and Asia, Middle East and North Africa units.
PepsiCo recorded organic sales growth of 2.1%. Chairman and CEO Indra Nooyi said the “solid” performance was “underpinned by global volume growth and positive net price realisation”. She stressed the result was achieved despite “challenging food and beverage industry trading conditions in North America and continued volatility in a number of developing and emerging markets”. The result does, however, demonstrate an ongoing slowdown in the company’s organic growth rate.
Outlook
PepsiCo reaffirmed its guidance for the full-year of 2017. The company said it expects core earnings per share to rise 8%, while currency exchange is expected to trim 3% off the bottom line. PepsiCo forecast 2017 earnings per share of $5.09.
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