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PepsiCo Shares Rise After It Beats Estimates on Good Snack and Drink Sales

September 29, 2016, 11:32 AM UTC
Pepsico CEO Indra Nooyi inspects Pete's Fresh Market in Chicago, April 2015
Pepsico CEO Indra Nooyi inspects Pete's Fresh Market in Chicago, April 2015.
Photograph by Mark Peterson — Redux

PepsiCo reported better-than-expected quarterly net revenue and profit, helped by higher demand for beverages and Frito-Lay snacks in North America.

The company, whose shares were up 2.3% in premarket trading on Thursday, also raised its 2016 adjusted profit forecast.

PepsiCo (PEP) and other processed food companies are spending more to develop products to meet the changing tastes of consumers, who are increasingly seeking healthier options.

Drinks like Propel flavored-water and Naked Cold Pressed juice, Smartfood Popcorn and the company’s low-calorie “Simply” brand snacks have helped drive sales in recent quarters.

Net revenue fell about 2% to $16.03 billion in the third quarter, but beat the average analyst estimate of $15.83 billion, according to Thomson Reuters I/B/E/S.

Revenue has fallen for the last eight quarters, hurt by high inflation in some Latin American economies such as Venezuela and Argentina and weak demand in Europe.

See also: PepsiCo Adds Probiotic Jolt to Tropicana

Net revenue in the North America beverages unit, the company’s biggest business, rose about 3 percent to $5.52 billion.

Net income attributable to PepsiCo rose to $1.99 billion, or $1.37 per share, in the quarter ended Sept. 3 from $533 million, or 36 cents per share, a year earlier when the company recorded a $1.36 billion impairment charge on its Venezuela operations.

Excluding items, the company earned $1.40 per share, beating the average analyst estimate of $1.32.

The company said it benefited from a multi-year cost-cutting plan, which includes closing plants, simplifying its organization structure and investment in manufacturing automation.

PepsiCo raised its full-year adjusted profit forecast by 7 cents to $4.78 per share.