US: PepsiCo Tops Estimates With Q2 Gains

PepsiCo has reported better-than-expected profit figures for its fiscal send quarter, helped by increased demand in North America and lower commodity costs. The results prompted the group to raise its adjusted-profit forecast for the year.

For the three months to 11 June, net profit was up 1.3% to $2.01bn, although revenue was down 3.3% to $15.4bn, hurt by currency fluctuations.  Revenue at its North America Beverages unit grew by 1%, while revenue from the Frito-Lay business grew 3%.  The group said it was boosted by a 6% drop in the cost of sales during the period.

PepsiCo reported increased demand for its non-cola drinks, such as Propel flavored water and Naked Cold Pressed juice, as well as for snacks such as Smartfood Popcorn and Simply.  CFO Hugh Johnston noted: “The North American strength is a big driver behind raising guidance for the year because North America really is performing strongly right now. Consumers are willing to pay for affordable treats that they find are new and interesting and, frankly, a differentiated product.”

The group said it is partially shielded from the effects of the Brexit vote, given its reliance on local sourcing in many markets.  It also said its Q2 gains means it now expects full-year adjusted earnings of $4.71 per share, up from its earlier forecast of $4.66 per share.