Photograph by Susana Gonzalez — Bloomberg/Getty Images
By John Kell
July 23, 2014

Pepsi’s second-quarter revenue improved slightly due to growth in its Frito-Lay snacks business in North America, although the company’s profit dipped slightly as a result of higher overhead costs.

The food-and-beverages giant, which sells soda, Frito-Lay snacks, Gatorade and Tropicana, reported balanced volume growth in the quarter — albeit at a very low level. Snacks and beverages volume each rose 1% in the latest period.

Net revenue inched up 0.4% for the Americas beverages business, Pepsi’s largest sales contributor. The largest soda companies in the U.S. are facing pressure in their home market as demand for carbonated soft drinks — the biggest category in the beverages business — has suffered a nearly decade-long slide. Diet sodas such as Diet Pepsi and Diet Coke, once seen as the industry’s savior, have struggled lately as some consumers worry about the sweeteners used in those products.

On Tuesday, rival Coca-Cola reported a 3% drop in second-quarter profit as currency headwinds ate into the company’s bottom line. However, Coke’s overall worldwide volume rose 3%.

Overall, Pepsi reported a second-quarter profit of $1.98 billion, or $1.29 a share, compared to last year’s net income of $2.01 billion, or $1.28 a share, in the same period. Core earnings in the latest period, which exclude commodity hedging and other items, totaled $1.32 a share. Net revenue climbed 0.5% to $16.89 billion.

Analysts had expected a profit of $1.23 a share on $16.8 billion in revenue.

In markets abroad, revenue was roughly flat in Europe but rose 1% in Asia, the Middle East and Africa. Pepsi’s Americas foods business revenue grew 1%, as growth for Frito-Lay offset a decline for Quaker Foods.

Meanwhile, Pepsi has been in the crosshairs of activist investor Nelson Peltz, who has called on the company to separate its global snacks and beverages businesses into two publicly-traded companies — a strategy Pepsi has rejected.

Pepsi now expects core per-share earnings for 2014 to rise 8% on a constant-currency basis, up from the prior target of 7% growth.

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