How PepsiCo Beat 1Q18 Estimates



Q1 results beat estimates

PepsiCo (PEP) beat analysts’ revenue and earnings expectations for fiscal 1Q18 today. The quarter ended on March 24. The company experienced strong top-line growth in developing and emerging markets. PepsiCo’s revenue grew 4.3% to $12.6 billion in fiscal 1Q18, beating analysts’ consensus estimate of about $12.4 billion. Foreign currency fluctuations had a two-percentage-point favorable impact on the fiscal 1Q18 revenue growth.

The company’s adjusted EPS (earnings per share) of $0.96 beat the analysts’ expectation of $0.93 and grew 2.1% on a year-over-year basis. The growth in the company’s adjusted EPS resulted from lower taxes.

Growth in international business

PepsiCo’s international segments delivered higher revenue in 1Q18, with strong growth in developing and emerging markets. Revenue for the company’s Latin America segment, Europe Sub-Saharan Africa segment, and Asia, Middle East and North Africa segment increased 13.7%, 15.4%, and 6.9%, respectively, in 1Q18.

Weakness in North America beverage business

A shift in consumer tastes from soda beverages to healthier drinks continued to drag on PepsiCo’s North America Beverage division. Revenue for the North America Beverage division, PepsiCo’s largest segment, declined 1.0% to $4.4 billion in fiscal 1Q18. However, there was some improvement compared to fiscal 4Q17, when the segment’s revenue declined 6.0% on a reported basis.

The segment’s operating profit declined about 23% to $388 million. In the 1Q18 press release, PepsiCo’s CEO Indra Nooyi indicated a need to focus on investing in the core soda beverage category.

In contrast, PepsiCo’s rival Coca-Cola (KO) recorded growth of 4% in the 1Q18 unit case volume of its sparkling beverages globally and a 3% rise in the North America sparkling beverage volumes.

Sales of PepsiCo’s Frito-Lay North America segment grew 3.4% to $3.6 billion in fiscal 1Q18, and operating profit was flat at $1.1 billion.

PepsiCo continues to expect its organic revenue to grow 2.3% in fiscal 2018 and its adjusted EPS to come in at $5.70 compared to $5.23 in fiscal 2017.

We’ll soon publish a detailed analysis of PepsiCo’s first-quarter results on our Consumer Staples page. We’ve added new data to our quote pages. Now one can get a valuation snapshot, earnings as well as revenue estimates, and historical data and dividend info. Take a look!

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