PepsiCo (PEP) This autumn 2020 earnings beat projections

Pepsi soft drinks are on display in a supermarket in San Francisco, California.

Justin Sullivan | Getty Images

PepsiCo on Thursday reported a fourth quarter profit beating estimates, driven by pandemic snacks and higher sales of beverages like Gatorade Zero and Bubly sparkling water.

After a strong quarter, the beverage and snack maker expects the results for 2021 to meet its long-term financial targets.

The company’s shares rose nearly 1% in premarket trading. Pepsi stock is down 6% over the past year, bringing it to a market value of $ 189 billion.

The company reported, versus Wall Street’s expectations based on an analyst survey by Refinitiv:

  • Earnings per share: $ 1.47 adjusted versus expected $ 1.46
  • Revenue: $ 22.46 billion versus $ 21.78 billion

The company reported net income of $ 1.85 billion, or $ 1.33 per share, for the fourth quarter, compared to $ 1.77 billion or $ 1.26 per share last year.

Excluding items, Pepsi earned $ 1.47 per share, beating analysts surveyed by Refinitiv at $ 1.46 per share.

Net sales increased 8.8% to $ 22.46 billion, beating expectations of $ 21.78 billion. The company’s organic sales, which exclude the effects of foreign currency, acquisitions and divestitures, increased 5.7%.

At Frito-Lay North America, organic sales increased 5% for the quarter. Tostitos and Cheetos were among the brands that consumers reached for when shopping for snacks at home. However, the segment’s operating income declined due to higher restructuring costs and higher operating costs.

Quaker Foods’ organic sales increased 8%. With many consumers still working from home, they bought maple syrup and pancakes for breakfast. On Tuesday, Pepsi renamed its Aunt Jemima brand to Pearl Milling Company after announcing in June that the character was based on a racial stereotype.

In the North American beverages unit, organic sales increased by 5.5%. Pepsi typically generates less sales outside of its home country than rival Coca-Cola, so organic sales for the segment developed positively in the third quarter. Gatorade Zero, Bubly and its Starbucks branded coffee beverages all contributed to the increase in sales.

For 2021, Pepsi expects organic sales to grow in the mid-single-digit range and core earnings per share to grow in the high-single-digit range, assuming constant exchange rates. The company is also increasing its dividend by 5% starting in June.

“For 2021, we plan that our organic sales and constant currency-neutral EPS growth are in line with our long-term goals,” said CEO Ramon Laguarta in a statement.

Read the full report here.

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