Although the shift in consumer preferences towards healthier products remains a concern for the soft drinks business, the same trend provides an opportunity for the snacks division to introduce healthy options and capture market share.
Revenue growth in the Frito-Lay North America and North America Beverages segments, along with strength in emerging markets, are likely to help the topline numbers in the first quarter. However, growth investments and higher expenses could impact the bottom line results.
In the fourth quarter of 2018, PepsiCo generated revenue and earnings that were in line with market estimates. Net revenue remained flat at $19.5 billion compared to the year-ago period while adjusted earnings grew nearly 14% to $1.49. Organic revenue grew 4.6%.
For the full year of 2019, PepsiCo anticipates organic revenue growth of 4% and a decline in core constant currency EPS of approx. 1%. The company expects core EPS of $5.50, reflecting a 3% drop versus 2018. Over the long-term, PepsiCo expects to achieve organic revenue growth of 4-6% and core constant currency EPS growth in the high single digits.
PepsiCo’s shares have gained 10.6% thus far this year. The stock was down 1.19% in afternoon trade on Tuesday. PepsiCo’s rival Coca-Cola (KO) will report its first quarter results on April 23.