PepsiCo Boosts Earnings Forecast
September 29 2016 - 7:50AM
Dow Jones News
PepsiCo Inc. raised its earnings forecast for the year as the
snack-and-beverage giant reported a surprise increase in core
profit, boosted by lower raw-material costs, despite sliding
revenue.
The maker of Pepsi-Cola, Cheetos and Gatorade now expects core
earnings this year of $4.78 a share, up from its prior projection
of $4.71 and ahead of Wall Street's projection of $4.76, according
to a Thomson Reuters poll of analyst estimates.
PepsiCo has increasingly relied on growth from its home market
amid turmoil overseas. North American beverage and Frito-Lay
businesses, its two largest top-line contributors, posted volume
and revenue growth. Operating results in both divisions were helped
by increased productivity and lower raw-material costs. Meanwhile,
the company's Latin America, as well as its Europe and sub-Saharan
Africa businesses reported revenue declines, which it blamed at
least in part on foreign exchange. Revenue in the Asia, Middle East
and North Africa division was essentially flat with revenue from
last year, hurt by foreign exchange.
Over all, PepsiCo posted a profit of $1.99 billion, or $1.37 a
share, up from $533 million, or 36 cents a share, a year earlier.
The year-ago quarter was hurt by a $1.36 billion impairment charge
related to its Venezuelan deconsolidation. Excluding certain items,
such as mark-to-market effects, PepsiCo reported core earnings of
$1.40 a share, up from $1.35 a year ago.
Analysts had projected earnings of $1.32 a share.
Revenue declined 1.9% to $16.03 billion. Analysts had projected
$15.83 billion in revenue.
PepsiCo continued to face weakening foreign currencies and the
impact from the deconsolidation of its Venezuelan business, which
each shaved 3 percentage points off the top line. Excluding such
effects, the company said its total revenue grew 4% on an organic
basis.
Shares rose 2.6% to $110.20 in recent premarket trading.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
September 29, 2016 07:35 ET (11:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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