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Pepsico Reports Second-Quarter Earnings, Revenue Topping Expectations on Frito Lay Strength

8:49 AM, Jul 10, 2018 — Pepsico (PEP) on Tuesday reported second-quarter earnings and revenue that topped expectation on the back of strong Frito Lay performance.

The company said adjusted earnings came in at $1.61 a share, up from $1.50 in the same period a year earlier and topping the estimate of $1.53 from analysts polled by CapIQ. Total revenue was reported at $16.09 billion was up from $15.71 billion in the same period a year ago and exceeded the Street projection of $16.05 billion.

Pepsi reaffirmed full year adjusted earnings-per-share guidance of $5.70, above the Street projection of $5.65. Pepsico continues to expect full-year organic revenue growth in line with the 2017 growth rate of 2.3%, and reported $63.53 billion in revenue for 2017 and analysts expect $65 billion for 2018.

Shares were up 3.2% in early trading Tuesday.

Net revenue in the second quarter for the company’s Frito Lay North America snack business rose 4% year-over-year to $3.837 billion. Its North American beverages segment fell 1% to $5.193 billion. Latin American and European/Sub-Saharan African revenue both grew while Asia/Middle East/North Africa saw a 2% decline.

Frito Lay operating profit grew 5%, “primarily reflecting the net revenue growth and planned cost reductions across a number of expense categories, partially offset by certain operating cost increases,” Pepsico said.

Management said it expects foreign exchange to have a “neutral” impact on revenue and earnings going forward, and an effective tax rate in the low-20s, reflecting the benefits of the Tax Cuts and Jobs Act.

“The benefit of the TCJ Act to be substantially reinvested in initiatives to benefit the company’s US-based front-line workforce and to otherwise increase the company’s capabilities,” Pepsico said.

Core earnings are pegged at $5.70, a 9% increase versus 2017. The company expects cash from operating activities of about $9 billion, and free cash flow of about $6 billion, assuming net-capital spending of about $3.6 billion and discretionary pension contributions of $1.4 billion. Total cash to shareholders is seen at about $7 billion with dividends of about $5 billion. Share repurchases of $2 billion are forecast.

Companies: Pepsico, Inc.
Price: 111.15 Price Change: +3.39 Percent Change: +3.15

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