Pepsico Q1 Adj. Profit Beats Estimates, Revenue Misses; Sees FY16 EPS Below View
Snack and beverage giant PepsiCo Inc. (PEP) reported Monday lower earnings in its first quarter, reflecting charge and weak revenues. Adjusted earnings, however, topped analysts' estimates, while revenues missed. Further, the company continues to expect higher earnings for fiscal 2016, but below analysts' estimates.
For the first quarter, net income attributable to the company declined 24 percent to $931 million from last year's $1.22 billion. Earnings per share were $0.64, down 21 percent from $0.81 a year ago.
The latest results were hurt by a non-core impairment charge of $373 million or $0.26 per share to reduce the value of the company's 5 percent indirect equity interest in Tingyi-Asahi Beverages Holding Co. Ltd. to its estimated fair value.
On an adjusted basis, core earnings were $1.30 billion, or $0.89 per share, compared to $1.25 billion, or $0.83 per share a year earlier.
On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.81 per share. Analysts' estimates typically exclude special items.
The company's quarterly revenue fell 2.9 percent to $11.86 billion from $12.22 billion last year. Analysts were looking for $11.88 billion for the period.
The results reflected foreign exchange translation's 4.5-percentage-point unfavorable impact and the deconsolidation's 2-percentage-point unfavorable impact. On an organic basis, revenues grew 3.5 percent for the quarter.
Core gross margin expanded 130 basis points and core operating margin increased 165 basis points. Chairman and CEO Indra Nooyi said, "We are off to a strong start to the year and that gives us added confidence in achieving our financial objectives for 2016."
Looking ahead, for fiscal 2016, Pepsico continues to project core earnings per share of $4.66, compared to last year's $4.57 per share. Analysts project earnings of $4.70 per share.
The company still expects approximately 4 percent organic revenue growth, excluding the impact of the 53rd week, while the 53rd week will contribute approximately 1 percentage point to reported net revenue growth.
Based on current foreign exchange market consensus rates, foreign exchange translation would negatively impact reported net revenue growth by 4 percentage points.
The company said it continues to expect to return a total of approximately $7 billion to shareholders through dividends of approximately $4 billion and share repurchases of approximately $3 billion. Pepsico shares closed Friday's trading at $103.73, up 0.55 percent. (dpa)
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