Food and beverage company PepsiCo (PEP) reported first-quarter 2018 results, with earnings and revenue beating analysts expectation. The company reported a 4% growth in its revenue to $12.5 billion, and earnings on a diluted basis rose 3% to $0.94 per share.
The company continues to see weakness in its North America Beverage business, which constitutes for nearly 33% of the total revenue. The business was negatively impacted by operating cost inflation, as well as higher raw material costs. But since the company has been working on boosting the advertising for these brands, there was a sequential improvement in the top line momentum when compared to 4Q 2017.
PepsiCo reported a moderate revenue growth in its Frito-Lay business. This boost was mainly due to the company’s foray into healthy snacks.
For the full year, on an adjusted basis, the company expects organic revenue growth to be at least in line with the 2017 growth rate of 2.3 percent. Pepsico anticipates its core EPS to be about $5.70, up 9% compared to 2017 core EPS of $5.23.
Frito-Lay unit starts boosting results in the new quarter
The beverage giant PepsiCo (PEP) reported first-quarter 2018 results, with earnings and revenue topping analysts expectations, as it benefited from the increased demand for its snacks business. The company’s snack division made up for the waning demand of the North America Beverage unit.
Revenues during the quarter rose 4% to $12.5 billion. Earnings per share on a diluted basis rose 3% to $0.94 from $0.91. Core earnings came in at $0.96, up 3% over Q1 2017.
PepsiCo and its rival Coco-Cola (KO) worked on a similar strategy. They mainly focused on innovations and acquisitions to expand their portfolio for better products that cater to the changing demands of the consumers.
With better-than- expected first quarterly results, Coco-Cola is off to strong growth this year. PepsiCo shares were down 14% year-to- date, but it climbed 0.8% in premarket trading.
The company’s foray into healthy snacks paid off, as the Frito-Lay North America snacks business boosted the company’s results in the latest quarter. The snacks unit that tallies for 25% of the total revenue posted a robust 3% growth in its organic
revenue.
Despite the earnings and revenue beat, the beverage giant continues to struggle with its North America Beverage unit, that accounts for nearly 33% of the company’s total sales. The struggle continues as consumer shift rapidly away from the sugary sodas. Due to this low performance, the company had once been under pressure to spin off this business and focus mainly on its strong snacks business.
“We continued investing in and growing share in a number of faster-growing, future-facing categories. However, competitively we recognize the need to step up investments in core carbonated soft drinks, which we intend to responsibly do. We believe our plans will drive further improvement as the year progresses. Importantly, we remain on track to achieve the financial targets we set out at the beginning of the year,” said CEO Indra Nooyi.
For the full year, on an adjusted basis, the company expects organic revenue growth to be at least in line with the 2017 growth rate of 2.3 percent. Pepsico anticipates its core EPS to be about $5.70, up 9% compared to 2017 core EPS of $5.23.