PepsiCo Exceeds Earnings Forecast Due Higher Prices

PepsiCo Exceeds Earnings Forecast Due Higher Prices
Picture from PepsiCo/PepsiCo Website

PepsiCo has reported solid earnings result for the second quarter, and in response, the company has also decided to increase its full-year earnings outlook. During the second quarter, PepsiCo, Inc. has enjoyed an increase in organic revenue growth by 5.1%. Meanwhile, the company’s core earnings per share is at $1.32 while the reported earnings per share is at $1.33, reflecting an increase of 3%.


At the same time, the company’s core constant operating profit has also increased by 8% while the reported operating profit stayed even. However, PepsiCo also experienced a decrease in reported net revenue by 6%. This was mainly attributed to foreign exchange.

PepsiCo Chairman and Chief Executive Officer Indra Nooyi is quite delighted by the second quarter performance. She said, “PepsiCo achieved strong financial performance in the second quarter. We delivered mid-single digit organic revenue growth, strong gross margin expansion and double-digit core constant currency EPS growth. Based on our year-to-date results and positive momentum in the businesses, we are increasing our full-year core constant currency EPS (earnings per share) growth target to 8 percent.”

Aside from adjusting its outlook, PepsiCo has also revealed that they are on track to deliver as much as $1 billion in productivity savings. As Nooyi had explained, “We remain on track to deliver our 5 year, $5 billion productivity savings through 2019.”

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Moreover, they are also poised to deliver returns to their valued shareholders that would be worth anywhere between $8.5 and $9 billion in cash.

Meanwhile, Nooyi believes that the secret behind PepsiCo positive performance is due to several factors. She explained, “Our results also reflect our keen focus on innovation, brand building and marketplace execution. Through scientific R&D and strategic insights, we are developing sustainable innovation to offer consumers the range of food and beverage choices they’re looking for and creating a powerful platform for growth. As a result, we continue to drive growth for our retail partners.”

Furthermore, Nooyi explained, “The macroeconomic environment around the world remains volatile and foreign exchange headwinds persist in many of our international markets. The steps we are taking to manage our businesses responsibly – such as taking pricing actions and optimizing our global sourcing – are clearly contributing to high-quality top and bottom-line year-to-date results and position us well for the remainder of 2015.”

To date, PepsiCo boasts of 22 “iconic, billion-dollar brands” in the food and beverage category. And they are consumed by people in more than 200 countries and territories. The company’s top global brands include Pepsi, Frito Lay’s, Lipton, 7UP, Mountain Dew, Cheetos, Gatorade, Quaker Oats, Starbucks, Aquafina, Tostitos, Ruffles and Tropicana. PepsiCo is currently the largest contributor among food and beverage manufacturers when it comes to retail sales growth.