Why PepsiCo’s Fiscal 3Q17 Revenue Lagged Analyst Expectations
Revenue lags estimates
Beverage giant PepsiCo (PEP) delivered revenue of $16.2 billion in fiscal 3Q17, which ended on September 9, 2017. It lagged the consensus analysts’ revenue estimate of $16.3 billion. It exceeded analysts’ revenue estimate in the first two quarters of fiscal 2017.
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What impacted 3Q17 revenue?
PepsiCo’s revenue rose 1.3% on a year-over-year basis in fiscal 3Q17. Adverse currency fluctuations impacted its top-line growth by one percentage point. Excluding the impact of currency headwinds and structural changes, PepsiCo’s organic revenue rose 1.7% in the quarter, mainly due to higher pricing.
Its fiscal 3Q17 revenue growth was lower than the 2.0% growth in fiscal 2Q17 but an improvement over the 1.9% fall in fiscal 3Q16.
North America Beverages, the company’s largest segment, had a dismal quarterly performance, which negatively impacted overall revenue growth. The company cited unfavorable weather and a slowdown in its convenience-store channel as reasons for the segment’s lower-than-expected revenue. We’ll look at the performances of the company’s segments in detail in the next part of this series.
Rival Coca-Cola (KO) is scheduled to announce its 3Q17 results on October 25, 2017. Analysts currently expect Coca-Cola’s revenue to fall ~18.0% to $8.7 billion.
Change in guidance
Given the challenging business conditions, PepsiCo now expects its fiscal 2017 organic revenue growth to be about 2.3%. It previously expected organic revenue growth of at least 3.0%.
PepsiCo now expects currency fluctuations to have a one percentage point impact on its reported net revenue growth compared to the previous estimate of two percentage points.