Thursday, July 10, 2014

PepsiCo beats expectations, stands by portfolio

July 24. 2013 9:35AM
Associated Press

Story Tools
PrintPrint | E-MailEMail | SaveSave | Hear Generate QR Code QR
Send to Kindle

(AP) PepsiCo Inc. reported a higher quarterly profit that topped Wall Street expectations and noted that its mixed portfolio played a role, underscoring its commitment to selling both drinks and snacks.

The company, which makes Gatorade, Doritos, Tropicana and Quaker, said volume rose 2 percent in its Americas food unit for the quarter, with pricing up 5 percent.

In its Americas beverage unit, volume fell 3.5 percent. Sodas in North America fell in the mid-single digits.

The results come a week after investor Nelson Peltz said he wants PepsiCo to split its beverage and food businesses and buy Oreo cookie maker Mondelez to create a major global snack food company. Peltz says the company's snacks unit is being overshadowed by its underperforming drinks unit.

In an interview on CNBC, however, Chief Financial Officer Hugh Johnston shot down the idea and said that having a variety of products helped the company deliver strong results despite bad weather during the period.

For example, he noted that Gatorade sales increase when it's hot, and that Quaker and Tropicana sales increase when it's cold.

"The portfolio is what enables you to power through these things," Johnston said.

Last week, Coca-Cola Co. had blamed unusually cold, wet conditions for its underwhelming results, saying such conditions aren't good for sales of soda and other drinks.

PepsiCo, based in Purchase, N.Y., noted that its improved productivity also helped lift operating profit during the period. It stood by its outlook for year, with core earnings per share expected to grow 7 percent.

Its stock was up 1 percent at $87.20 in premarket trading. Over the past year, it's up 25 percent.

PepsiCo has repeatedly stressed that it plans to move forward as a combined snack and drink company, and that it's not interested in any major deals. The CEO of investment firm BlackRock, which owns a 5 percent stake in PepsiCo, has said that he backs the company and disagrees with Peltz's plan.

Besides, PepsiCo is already reviewing some options that could quiet investors.

The company is considering a restructuring for its North American beverage unit, including a possible spinoff. That would mean that the company would still sell its beverages in others parts of the world, such as China and India, where the business is faring far better.

An update on that review isn't expected until early next year.

For the quarter, PepsiCo also reported a 6 percent increase in volume for snacks and a 9 percent jump in drinks for the region encompassing Asia, the Middle East and Africa.

The company said it earned $2.01 billion, or $1.28 per share, for the period ended June 15. That's up from $1.49 billion, or 94 cents per share, in the year-ago period when its results were hit by one-time charges as a result of a deal to expand distribution in China.

Not including one-time items, it earned $1.31 per share, above the $1.19 analysts expected.

Revenue rose 2 percent to $16.81 billion, more than the $16.79 billion forecast by Wall Street.

Associated Press

comments powered by Disqus Commenting Guidelines
Mortgage Minute

Search for New & Used Cars

Used New All

Search Times Leader Classifieds to find just the home you want!

Search Times Leader Classifieds to find just what you need!

Search Pet Classifieds
Dogs Cats Other Animals

Social Media/RSS
Times Leader on Twitter
Times Leader on Youtube
Times Leader on Google+
The Times Leader on Tumblr
The Times Leader on Pinterest
Times Leader RSS Feeds