PepsiCo revenues rise in Nooyi’s final quarter as CEO

PepsiCo has reported that its North American beverage unit has returned to growth and the company’s net revenue has risen in its third-quarter results.

The company surpassed analyst expectations by recording net revenues of $16.5 billion in Indra Nooyi’s final quarter in charge of the company, before Ramon Laguarta takes over as PepsiCo CEO on 3 October 2018.

This represented a 1.5% revenue rise when compared to the same quarter last year, as the company was boosted by the strong performance of its Frito-Lay Snacks Division and the strong performance of the company’s key drinks such as Pepsi, Mountain Dew and Gatorade.

PepsiCo’s North American Beverages division returned to growth as it recorded an increase in sales volumes and net revenues of $5.46 billion, a 2% increase when compared to the same period last year, as the company continued its shift away from high-sugar soft drinks in favour of healthier alternatives.

This strategy led the company to pay $3.2 billion to acquire Israel-based carbonated water machine maker SodaStream in the quarter, as PepsiCo aims to find new ways to appeal to consumers who are moving away from consuming high-sugar soft drinks.

Despite the return to sales growth, the North American beverage unit’s operating profit fell 14%, as increasing operating costs and higher commodity costs affected the unit.

The company’s overall operating profits fell 3% year-on-year to $2.84 billion as restructuring costs bit into the company’s profit margin.

PepsiCo’s international divisions performed strongly in the quarter, as operating profit increased 17% in the Asia, Middle East and North Africa unit, 3% in Europe Sub-Saharan Africa, and marginally in Latin America.

PepsiCo chairman and CEO Nooyi said: “We are pleased with our results for the third quarter.

“We continued to see very strong operating performance from our international divisions, propelled by developing and emerging markets; Frito-Lay North America generated solid net revenue and operating profit growth; and North America Beverages delivered another quarter of sequential improvement in top-line performance.

“On the strength of our year-to-date results, we have revised upward our full-year organic revenue growth target.

“Additionally, given the recent strengthening in the US dollar we have revised our full-year core earnings per share target to reflect our updated expectation of an approximate 1 percentage point headwind from foreign exchange translation.”