What Drove PepsiCo’s 2Q17 Earnings?

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Part 2
What Drove PepsiCo’s 2Q17 Earnings? PART 2 OF 7

PepsiCo’s Fiscal Revenue Rises on Higher Pricing

Revenue trend

PepsiCo’s (PEP) revenue rose 2.0% to $15.7 billion in fiscal 2Q17, which ended on June 17, 2017. The company exceeded the consensus Wall Street analyst revenue expectation of $15.6 billion. Fiscal 2Q17 was the third consecutive quarter of revenue growth for PepsiCo following eight straight quarters of lower revenue.

PepsiCo’s Fiscal Revenue Rises on Higher Pricing

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Higher pricing

PepsiCo’s revenue growth in fiscal 2Q17 was driven by a three percentage point favorable impact of higher pricing. PepsiCo and its peers have been trying to offset the impact of softer volumes and higher commodity prices through increased pricing. PepsiCo’s overall volumes remained flat in fiscal 2Q17 on a year-over-year basis.

Adverse foreign currency fluctuations negatively impacted PepsiCo’s fiscal 2Q17 revenue growth by 1.5 percentage points. PepsiCo’s 2.0% revenue growth in fiscal 2Q17 was higher than the 1.6% growth in fiscal 1Q17. The company also improved compared to fiscal 2Q16, in which revenue fell 3.3%. Excluding the impact of foreign exchange translation and structural items, PepsiCo’s organic revenue growth was 3.1% in fiscal 2Q17.

Analysts expect soda giant Coca-Cola (KO) to fall about 16.1% in 2Q17. Currency headwinds, structural changes, and weak volumes have been adversely impacting Coca-Cola’s revenue. Dr Pepper Snapple (DPS), the third-largest soda maker in the US, is expected to deliver revenue growth of 4.4% in 2Q17.

Guidance intact

PepsiCo continues to expect organic revenue growth of at least 3% in fiscal 2017. The company expects currency headwinds to adversely impact reported net revenue growth by about two percentage points.

We’ll discuss the performance of PepsiCo’s segments in the next part of this series.


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