Pepsi Says Pricing Lifts Results--Update
April 26 2017 - 8:45AM
Dow Jones News
By Joshua Jamerson
PepsiCo Inc. said higher pricing helped boost results in the
latest quarter as volumes of its snacks and beverages in North
America were pressured amid shifting consumer tastes.
Chief Executive Indra Nooyi said first quarter profit and
revenue, which topped Wall Street estimates, came "despite
challenging food and beverage industry trading conditions in North
America and continued volatility in a number of developing and
emerging markets."
The Purchase, N.Y., maker of Frito Lay snacks, Gatorade and its
namesake cola has been putting an emphasis on products it dubs
"guilt-free," which include diet sodas as well as snacks with low
levels of sodium and saturated fat, as consumers look for
alternatives to sugary snacks and drinks. The company is aiming for
sales growth of such products to outpace the rest of its portfolio
by 2025.
For example, as bottled water consumption outpaces soda in the
U.S. for the first time, Pepsi is trying to get a piece of the
premium bottled-water category with LIFEWTR, which made its debut
with a Super Bowl ad this year to compete with Coca-Cola Co.'s
smartwater.
PepsiCo's chief financial officer, Hugh Johnston, said that
LIFEWTR is "a huge success right out of the block," adding that it
"continues to sell out as quickly as we can make it."
PepsiCo's beverage volumes were about flat in the latest
quarter, with North American beverage segment posting a 1% drop.
Rival Coca-Cola Co. reported Tuesday that its volumes world-wide
were even with the year-ago quarter.
Diet Pepsi continues to struggle, but Pepsi Zero Sugar, which
was featured during the Super Bowl halftime show, is picking up
some of those sales. Mr. Johnston cited a line of unsweetened tea
as another alternative.
"Where the consumer wants to go, we're going to have great
products," he said.
Quaker Foods, which includes the Rice-A-Roni and Aunt Jemima
brands, is hurting as consumers shop more around the perimeter of
the store rather in the center aisles. PepsiCo is innovating more
with snack bars and working with retailers to try to get store
shoppers into the aisles.
PepsiCo's Frito Lay volumes fell 1.5% and Quaker Foods volume
fell 1%. However, companywide, organic revenue rose 2.1% from the
year-ago quarter.
Earlier this month Pepsi yanked a commercial after a backlash
swept across social media. The 2 1/2 -minute spot was developed by
Pepsi's in-house Creators League Studio. Analysts are likely eager
to hear how the company plans to pivot from its marketing misstep
when executives host a conference call later Wednesday morning.
Over all, for the March quarter, Pepsi posted earnings of $1.32
billion, compared with $931 million a year ago. Earnings-per-share
of 94 cents topped the consensus estimate of 92 cents. Revenue of
$12.05 billion topped estimates of $11.98 billion.
Shares, which have climbed more than 9% so far this year, were
inactive in premarket trading.
Jennifer Maloney contributed to this article
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
April 26, 2017 08:30 ET (12:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
PepsiCo (NASDAQ:PEP)
Historical Stock Chart
From Aug 2024 to Sep 2024
PepsiCo (NASDAQ:PEP)
Historical Stock Chart
From Sep 2023 to Sep 2024