PepsiCo on Wednesday reported quarterly earnings and revenue that topped analysts’ expectations, thanks to continued growth internationally and by its Frito-Lay snack business.
Shares of the company rose 2% in premarket trading following the announcement.
“Frito-Lay North America and each of our international divisions delivered particularly strong operating performance, and PepsiCo Beverages North America generated sequential quarterly net revenue acceleration,” CEO Ramon Laguarta said in a statement.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 97 cents, adjusted, vs. 92 cents expected
- Revenue: $12.88 billion vs. $12.70 billion expected
The Frito-Lay owner reported fiscal first-quarter net income of $1.41 billion, or $1 per share, up from $1.34 billion, or 94 cents per share, a year earlier.
Excluding restructuring and impairment charges, tax benefits and other items, PepsiCo earned 97 cents per share, topping the 92 cents per share expected by analysts surveyed by Refinitiv.
Net sales rose 2.6% to $12.88 billion, beating expectations of $12.70 billion. Frito-Lay was the standout this quarter with sales growing 5.5% from last year. PepsiCo has been investing in its snack business by adapting its portfolio to changing consumer tastes, like its acquisition of healthy snackmaker Bare Foods.
The company has effective net pricing to thank for some of its revenue growth. For example, sales volume for its North American beverage business dropped by 2% during the quarter that ended March 23, but PepsiCo raised prices by 4%, resulting in 2% sales growth.
Organic revenue, which strips out the impact of acquisitions, divestitures and foreign exchange, grew by 5.2 percent during the quarter. Laguarta blamed currency headwinds for the difference between overall sales growth and organic growth. Like rival Coca-Cola, the global soda giant is facing foreign exchange pressure.
Its international segments saw the highest organic revenue growth. The company’s Latin American and Asia, Middle East and North Africa divisions reported double-digit organic growth.
On Wednesday, the company reiterated its 2019 targets, including 4 percent organic revenue growth and earnings per share of $5.50.
Last quarter, PepsiCo missed Wall Street’s expectations for its 2019 outlook when it forecast declining earnings as it spends more on marketing and advertising to boost sales. To balance those investments, the soft-drink maker is planning to slash at least $1 billion in costs every year through 2023, which will include layoffs in jobs that can be replaced by automation.