Article Date 09/07/2019

Image from : Bloomberg

PepsiCo posts profit beating estimates on soda and snack sales

Source Bloomberg

PepsiCo Inc. reported quarterly profit that beat estimates with brands including Mountain Dew soda and Doritos chips boosting results.

-Second-quarter earnings, excluding some items, amounted to US$1.54 a share, compared with projections of US$1.50. Revenue of US$16.44 billion was narrowly ahead of estimates.

Key Insights

-PepsiCo has boosted its marketing spending as it tries to drive growth in an increasingly competitive food-and-beverage market, particularly in the U.S. As soda consumption declines, the battle for beverage dollars is heating up again with long-time rival Coca-Cola Co.

-The company has benefited from higher prices on its chips and snacks, which have helped lift revenue even as it has been difficult to sustain volume growth, particularly in the key North American beverage unit.

-PepsiCo has been cutting costs, including reducing head count, as it tries to increase profit amid higher commodity costs and headwinds from foreign currency.

Market Reaction

-The shares had advanced 20 per cent this year through Monday’s close, about double the 9.8 per cent gain for Coca-Cola.

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