PepsiCo has recorded a net sales increase of 2% in its second-quarter results, thanks to the strong performance of its Frito-Lay North America unit.
Sales reached $16.09 billion and total operating profit was up 4% to $3.03 billion. The company’s Frito-Lay North America business – which includes brands such as Cheetos, Doritos and Tostitos – posted a net sales rise of 4%.
However, the company’s largest unit – North America beverages – recorded a net revenue decline of 1% to $5.19 billion and operating profit dropped by 16%, in part due to operating and commodity cost increases.
PepsiCo has profited from the performance of snack brands such as Doritos and Cheetos.
The rate of sales decreases in the North America beverages unit is showing signs of slowing; in the company’s first-quarter results earlier this year sales were also down 1%, following two consecutive quarters of 3% reductions.
PepsiCo has been under pressure to adapt to changing consumer tastes as consumption of carbonated soft drinks dropped to a 32-year low in the US last year, according to Beverage-Digest.
PepsiCo CEO Indra-Nooyi
The company is now increasingly reliant on its salty snack portfolio to boost revenues, reflected in its firm’s move for US maker of baked fruit and vegetable crisps Bare Snacks earlier this year. It also plans to bring its Australian potato chip brand Red Rock Deli to the US for the first time.
In its Europe Sub-Saharan Africa division, net sales surged by 11% to $3.12 billion, while Latin America sales were up by 1% to $1.84 billion.
PepsiCo CEO Indra Nooyi said: “We are pleased with our results for the second quarter and we remain on track to achieve the financial targets we set out at the beginning of the year.
“The majority of our businesses performed very well, particularly our international divisions propelled by continued growth in developing and emerging markets, and our North America beverages sector posted sequential net revenue and operating profit performance improvement.”
As it aims to keep pace with shifts in consumer trends, PepsiCo announced the second year of its Nutrition Greenhouse incubator scheme in May.
The programme is designed to discover and nurture breakthrough brands in the food and beverage sector.
© FoodBev Media Ltd 2018
Subscribe to FoodBev Media’s updates today for the latest food and beverage industry news and free insights delivered straight to your inbox!
Sign up here.