Pepsico Fourth Quarter Revenue Beats Estimates Despite Jump in Cost of US Raw Materials

7:21 AM, Feb 13, 2018 — Pepsico (PEP) unveiled full year guidance which was ahead of analysts’ expectations on Tuesday morning as it reported a jump in both its core earnings and revenue for the fiscal fourth quarter helped by rising sales in its Europe and Sub-Saharan Africa business segments.

The food and beverage company, whose brands include Pepsi-Cola, Quaker and Tropicana (pictured, left), generated revenue worth $19.53 billion in the period, up from $19.52 billion in the same quarter last year. The Street view was for revenue of $19.4 billion.

Core earnings rose by 9% year-on-year to of $1.31 per share compared to $1.20 in the prior-year period. The result also surpassed analysts’ expectations for earnings per share of $1.30.

Broken down by segment, the largest portion of revenue came from Pepsico’s North American beverages in the fourth quarter, which contributed $5.90 billion to the total revenue. This was, nevertheless, down 6% year-on-year which the company attributed in part to the negative impacts of higher raw material costs, operating cost inflation and restructuring charges.

Frito-Lay North America’s revenue accounted for the second largest chunk of overall sales, worth $4.83 billion, down by 1% year-on-year which was partly the result of a 53rd reporting week in the prior-year period as well as higher raw material costs. Revenue from Europe, Sub-Saharan Africa was up 11% year-on-year at $3.70 billion.

Pepsico added that the quarterly results had also been impacted by a provisional net tax expense of $2.5 billion associated with the enactment of the new tax reform as well as restructuring charges of $226 million which included an expansion of the company’s multi-year productivity plan.

“We met or exceeded most of the financial goals we set out at the beginning of the year. We delivered these results in the midst of a dynamic retail environment and rapidly shifting consumer landscape,” Chief Executive Officer Indra Nooyi said.

For the fiscal year 2018, the company is targeting core earnings per share of $5.70, just ahead of the Street’s estimate for $5.67 per share.

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