PepsiCo Q2 Results Top Estimates

Lifts FY17 Earnings View, Below Market

13-Jul-2017 - USA

Beverages giant PepsiCo Inc. (PEP) reported Tuesday higher profit in its second quarter with increased revenues, despite weak margin. Core earnings per share and net revenues topped market estimates. Further, the company lifted fiscal 2017 forecast for core earnings per share, but below market view.

In pre-market activity on the NYSE, PepsiCo shares were losing around 0.24 percent to $114.

For the second quarter, net income attributable to the company grew 5 percent to $2.11 billion from last year's $2.01 billion. Earnings per share increased 6 percent to $1.46 from $1.38 a year ago.

Core attributable earnings were $2.16 billion or $1.50 per share, compared to last year's $1.97 billion or $1.35 per share.

On average, 20 analysts polled by Thomson Reuters expected earnings of $1.40 per share for the quarter. Analysts' estimates typically exclude special items.

In the quarter, reported gross margin contracted 55 basis points and core gross margin contracted 5 basis points. Reported operating margin contracted 20 basis points, while core operating margin expanded 50 basis points.

Net revenue increased 2 percent to $15.71 billion from prior year's $15.40 billion. Organic revenue growth was 3.1 percent. Analysts were looking for revenues of $15.61 billion for the quarter.

Frito-Lay North America revenues grew 3 percent impacted by productivity gains, partially offset by operating cost inflation and higher raw material costs.

Quaker Foods North America revenues were down 1 percent, and Asia, Middle East and North Africa revenues were down 8 percent.

Chairman and CEO Indra Nooyi said, "Our results for the second quarter were very much in line with our expectations and we remain on track to meet our 2017 financial goals. "

For fiscal 2017, the company now expects core earnings per share of $5.13, higher than previous estimate of $5.09 per share. Analysts now expect earnings of $5.14 per share for the year. In the year 2016, core earnings per share were $4.85.

Consistent with its previous guidance for 2017, the Company expects organic revenue growth of at least 3 percent.

Further, the company said it continues to expect approximately $10 billion in cash flow from operating activities, dividend payments of approximately $4.5 billion, and share repurchases of approximately $2 billion.(dpa)

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