PepsiCo has reported third-quarter revenue 1.3% higher than last year, with net profit growing more than 7.6% to $2.14 billion.
Net revenue stood at $16.24 billion – up from $16.03 billion in the third quarter of 2016 – while operating profit was 6% stronger at $2.99 billion.
Growth in Latin America and Europe and Sub-Saharan Africa helped alleviate disappointing performance in PepsiCo’s North America Beverages division, which was affected by increased operating costs and a 6% reduction in volume.
PepsiCo chairman and CEO Indra Nooyi said: “Overall, our businesses performed well in the third quarter in what continues to be a challenging environment. Each of our operating sectors delivered results in line with or ahead of our expectations, with the exception of North America Beverages (NAB), where revenues declined following two consecutive years of very strong third-quarter growth.”
Both top-line and bottom-line improvements puts it in a stronger position financially than many of its peers – including General Mills and Kellogg, which have both recently announced drops in quarterly sales.
“Despite the challenges in our NAB business, the PepsiCo portfolio overall generated revenue, operating profit and earnings per share growth,” Nooyi added.
The unit covers all of PepsiCo’s beverage sales in the US and Canada, including some of its most recognisable brands – the likes of Pepsi, juice brands Tropicana and Naked, plus functional drinks like Gatorade and Mountain Dew.
NAB also manufactures certain brands licensed from Dr Pepper Snapple – including Dr Pepper, Crush and Schweppes – as well as juice brands licensed from Dole Food and Ocean Spray.
Revenue and volume
Across all regions, revenue was up 1% on an as-reported basis, with 2% organic growth. This was strongest in Europe and Sub-Saharan Africa (8%), followed by Latin America (6%) and then PepsiCo’s Frito Lay North America division (3%).
Only two of six regions saw revenue fall – Asia, the Middle East and North Africa (-4%) and North America Beverages (-3%), which was the real problem child of this quarter.
Gross profit, operating profit and net profit all rose.
Volume was flat overall, balanced by 1% stronger volume in foods and 1% weaker volume in beverages. The crux of that beverage decline, obviously, was North America Beverages, which recorded a 6% fall during the third quarter.
Quaker Foods North America grew volume by 1%; Europe and Sub-Saharan Africa was up 6% in food and 2% in beverages; while Asia, the Middle East and North Africa was between 1% and 2% stronger overall.
PepsiCo has downgraded its expectations for full-year organic revenue growth from ‘at least 3%’ to nearer 2% – its year-to-date figure.
© FoodBev Media Ltd 2018