PepsiCo Inc. (NYSE: PEP) this morning reported second-quarter adjusted earnings of $1.12 per share on $16.46 in revenue. Earning per share (EPS) dropped from $1.21 in the same period a year ago, while revenue was down from $16.83 billion. The results compare to the Thomson Reuters consensus estimates for EPS of $1.09 and $16.5 billion in revenue. Currency exchange translation shaved $0.04 from quarterly unadjusted EPS and another $0.04 reflect the impact of restructuring charges.
The beverage and snack food maker also affirmed guidance for full-year EPS to about $4.18, versus the Thomson Reuters consensus for EPS of $4.09. The company also expects year-over-year revenue growth in the low single digits. Excluding structural changes, revenue is expected to rise in the mid-single digits from last year’s total of $65.88 billion. The consensus estimate calls for revenue of $66.17.
About half of the revenue decline was due to refranchising in China and Mexico, according to the report. Net revenue rose 10% in the company’s Asia, Middle East & Africa region due to the refranchisings, which cost the company 15% of its Chinese revenue.
The company’s CEO noted:
We were able to achieve significant pricing in the second quarter, reflecting the strength of our brand portfolio and the success of our packaging initiatives. Our disciplined approach to pricing and continued focus on brand investment drove 5 percent organic net revenue growth and allowed us to substantially offset approximately $350 million in commodity cost inflation.
PepsiCo’s shares closed at $68.79 last night and are inactive in premarket trading. The 52-week trading range is $58.50 to $70.89. Thomson Reuters had a consensus analyst price target of $72.38 before today’s results, and that is not likely to change.
Paul Ausick
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