PepsiCo defies industry headwinds, topping earnings and revenue top expectations - CNBC

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PepsiCo on Tuesday reported fourth-quarter earnings and revenue that topped analysts’ expectations, despite the pressure that retailers and changing consumer tastes have put it on its core beverage business.
Here is what PepsiCo reported versus analyst expectations:
  • EPS: $1.31 per share, adjusted, vs. $1.30 expected, according to Thomson Reuters
  • Revenue: $19.53 billion, vs. $19.39 billion expected, according to Thomson Reuters

“We are pleased with our performance for the fourth quarter and full year 2017. We met or exceeded most of the financial goals we set out at the beginning of the year. We delivered these results in the midst of a dynamic retail environment and rapidly shifting consumer landscape,” Chairman and CEO Indra Nooyi said in a statement.

PepsiCo recorded a net loss of $710 million, or 50 cents per share, compared to earnings of $1.40 billion, or 97 cents per share, in the year-earlier period.

Earnings in the latest period were hurt by a $2.5 billion one-time charge related to new U.S. tax laws. Excluding this and other one-time items, the company earned $1.31 per share, edging past analysts’ estimates of $1.30.

For the quarter, Pepsi’s net revenue of $19.53 billion was flat when compared with the year-ago period. Organic revenue, which excludes the impacts of foreign exchange and other changes, grew by 2.3 percent.

The company saw the greatest sales growth in Europe Sub-Saharan Africa, where net sales jumped 11 percent and Latin America, where sales grew 6 percent. Those regions combined comprised 21 percent of Pepsi’s revenue for the quarter.

Their growth made up for continued weakness in its largest business, North American beverages. Sales of drinks that include Tropicana and Gatorade continued to slide, with net sales dropping 6 percent.

Last quarter, PepsiCo’s CFO Hugh Johnston called weakness in in North American drinks a “toe stub” as the company looks to balance its slow-growing core business with more on-trend innovations. Carbonated and sugary drinks have come under pressure as consumer tastes have shifted to healthier business. Those drinks, though, still comprise the heft of Pepsi’s beverage sales.

“We are broadly impressed with Pepsi’s ability to deliver bottom line results, despite the dynamic retail environment and their continued under performance in the beverage performance,” said Bonnie Herzog, an analyst at Wells Fargo.

Net revenue at the Frito-Lay snack business fell 1 percent for the quarter, hurt by fewer weeks in the last period. After adjusting for this, organic revenue rose 5 percent.

Pepsi said also provided guidance on 2018. It expects full-year organic revenue growth to be at least in line with the 2017 growth rate. It anticipates core earnings per share of $5.70, a 9 percent increase over 2017.

The company boosted its annual dividend by 15 percent to $3.71 from $3.22 a share. It also announced a $15 billion stock buy-bck program.

Pepsi’s stock was up less than 1 percent in premarket trading.