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How PepsiCo’s 4Q16 Revenue Grew Despite Currency Headwinds

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Dec. 4 2020, Updated 10:53 a.m. ET

Revenue growth

PepsiCo (PEP) generated revenue of $19.5 billion in 4Q16, posting 5.0% year-over-year growth. This growth came after eight consecutive quarters of revenue decline. The company’s 4Q16 revenue was in line with Wall Street analysts’ revenue estimate.

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Key drivers

PepsiCo’s revenue growth of 5.0% in 4Q16 was driven by higher volumes and increased pricing. We’ll discuss PepsiCo’s segment performance in the next part of this series.

The additional 53rd week in fiscal 2016 boosted the company’s 4Q16 revenue growth by 3.5 percentage points. However, currency fluctuations continued to drag down the company’s top line and had a two-percentage-point impact on its 4Q16 revenue.

Excluding the impact of currency headwinds, structural changes, acquisitions, and divestitures, PepsiCo’s organic revenue grew 3.7% in 4Q16. This growth was a result of a 3.0% rise in food and snack organic volumes and a 1.0% rise in beverage organic volumes.

Unlike Coca-Cola (KO) and Dr Pepper Snapple Group (DPS), PepsiCo has a strong presence in the snack food market as well as the global non-alcoholic beverage market. Coca-Cola’s revenue fell 5.9% in 4Q16 due to persistent adverse forex fluctuations and structural headwinds. Dr Pepper Snapple’s 4Q16 sales grew 2.1%, driven by favorable product and package mix, higher volumes, and increased pricing.

Fiscal 2016 revenue

Overall, PepsiCo’s revenue grew 0.4% to $62.8 billion in 2016. Currency headwinds and the Venezuela deconsolidation impacted its 2016 revenue growth by three percentage points and two percentage points, respectively. The company’s organic revenue grew 3.7% in 2016. In part five of this series, we’ll discuss the company’s growth initiatives to improve its revenue.

PepsiCo expects its 2017 organic revenue to rise by at least 3%. Also, it expects currency headwinds to impact its reported revenue growth in 2017 by three percentage points. We’ll discuss PepsiCo’s segment performance in the next part of this series.

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