PepsiCo Revenue Climbs but Profit Drops on Higher Expenses -- 2nd Update
October 03 2019 - 8:52AM
Dow Jones News
By Allison Prang
PepsiCo Inc.'s sales climbed in its latest quarter amid the
company's efforts to invest in areas such as advertising and
manufacturing.
The food-and-beverage company said organic revenue growth, which
strips out currency swings and acquisitions -- was up 4.3% in the
period. The company is now guiding to either meet or beat its
expectations for organic revenue growth of 4% for the year.
Net income fell to $2.1 billion in the third quarter, compared
with $2.5 billion a year earlier. Earnings fell to $1.49 a share,
from $1.75 a share. Adjusted earnings were $1.56 a share, beating
FactSet's analyst consensus estimate by 6 cents a share.
PepsiCo's selling, general and administrative costs rose by more
than 8%, canceling out much of its top-line gains. The company's
income-tax provision almost tripled.
PepsiCo has been investing more in areas such as advertising and
distribution. In an interview Thursday, Chief Financial Officer
Hugh Johnston said that the company's advertising costs were up 12%
year to date and that investment has spanned across its different
brands. "We're seeing returns on the investment," Mr. Johnston
said.
PepsiCo has also added new lines to the company's manufacturing
plants, he said.
Though profit fell, net revenue climbed 4.3% to $17.19 billion,
helped by the Frito-Lay North America unit as well as its markets
abroad. Analysts were expecting revenue of $16.93 billion.
Net revenue at PepsiCo's North American beverage division rose
year over year. PepsiCo earlier this year rolled out three
different flavors of Pepsi that are made with real juice.
Shares of PepsiCo rose 2.1% in premarket trading.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
October 03, 2019 08:37 ET (12:37 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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