PepsiCo Q3 results hurt by focus on low sugar products | Progresiv
PepsiCo has reported relatively weak results for its fiscal third quarter, which it attributed largely to extensive focus in promotion of its low-calorie drinks. 
For the three months to 9 September, net profit was up 7.5% to 2.14 billion dollars, while revenue dipped by 0.4% to 16.24 billion dollars (+1.7% organic basis).
The group was hurt primarily by weakness at its North American beverage business, which saw revenue drop by 3.4% to 5.33 billion dollars, even as operating profit fell by 10% to 817 million dollars. PepsiCo attributed those declines to weaker demand for its legacy cola brands, and excess advertising on its healthier-for-you drinks.
CEO Indra Nooyi noted: “This summer, we directed too much of our media spending and shelf space to low-calorie, much smaller brands at the expense of our Pepsi and Mountain Dew trademarks.”
Meanwhile, CFO Hugh Johnston admitted: “We got a bit ahead of our skis and a little ahead of consumers, in terms of shifting media spending and shelf space…particularly in convenience stores, but also in supermarkets. By overdoing it, we squeezed Pepsi and Mountain Dew a little too tightly.”
PepsiCo has lowered its full-year forecast for organic revenue growth, and now expects it to grow by up to 2.3%, from a previous forecast of at least 3% growth. However, it raised its adjusted earnings per share growth forecast to a range of 8%-9%, saying currency fluctuations will hurt it less than expected. (www.kamcity.com)
