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PepsiCo’s Mixed Fiscal 3Q17 Results: What You Should Know

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Part 4
PepsiCo’s Mixed Fiscal 3Q17 Results: What You Should Know PART 4 OF 8

How PepsiCo’s Segments Fared in Fiscal 3Q17

Segment performance

With the exception of PepsiCo’s (PEP) North America Beverages segment and its Asia, Middle East, and North Africa segment, the company’s other segments delivered growth in fiscal 3Q17 revenue. In the previous part of this series, we looked in detail at the weakness in the North America Beverages segment. Its Asia, Middle East, and North Africa segment reported a 4.2% fall in fiscal 3Q17 revenue to $1.6 billion. The segment’s higher volumes and increased pricing were offset by currency headwinds. Excluding the impact of currency fluctuations and structural changes, the segment’s organic revenue rose 9.0% in the quarter.

How PepsiCo’s Segments Fared in Fiscal 3Q17

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North American segments

Unlike the North America Beverages segment, the other two segments in North America (Frito-Lay North America and Quaker Foods North America) delivered higher revenues in fiscal 3Q17.

Frito-Lay North America’s fiscal 3Q17 revenue rose 3.2% to $3.8 billion. The growth was mainly the result of higher pricing since the segment’s volumes were even on a year-over-year basis. The snack food business helped offset the weakness in its beverage business in the North America region.

Fiscal 3Q17 revenue for Quaker Foods North America rose 1.2% to $578.0 million with volumes increasing 1.0%. The segment’s volume growth was driven by mid-single-digit growth in oatmeal volumes and double-digit growth in bars. However, the segment experienced a low-single-digit decline in its ready-to-eat cereal volumes and a high-single-digit decline in the Roni brand.

Other segments

Fiscal 3Q17 revenue for PepsiCo’s Latin America segment rose 6.3% to $1.9 billion as a result of higher net pricing and favorable foreign exchange movements. However, the segment’s revenue growth was adversely impacted by lower snack and beverage volumes as well as the impact of refranchising a portion of the beverage business in Colombia.

Net revenue for the Europe Sub-Saharan Africa segment rose 8.2% to $3.1 billion in fiscal 3Q17. Higher volumes, increased pricing, and favorable foreign currency changes drove revenue growth in the quarter.

Looking ahead, weak soda volumes and macroeconomic challenges in Latin America and several markets in the Asia, Middle East, and North Africa segment are expected to impact PepsiCo’s revenue growth.

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