PepsiCo reports Q1 growth | Progresiv
PepsiCo has reported a solid rise in revenues for its fiscal first quarter, as strong results at its snacks and non-fizzy drinks helped offset weakness at its core cola brands. 
For the quarter, revenue was up 4.3% to 12.6 billion dollars (+2.3% organic basis), with volumes of food & snacks up 3%, while overall beverage volumes declined by 1%. Meanwhile, operating profit was down 3% to 1.81 billion dollars, although net profit grew by 2% to 1.35 billion dollars.
Sales at its North American beverage unit were down 2% on an organic basis, with volumes declining by 3%, as more consumers opted for healthier products. It also reported flat revenues and volumes at the Quaker Oats unit.
However, results were better at its Frito Lay North America unit, where organic revenues grew by 3% with volumes up 2%. In Latin America, revenues were up 9%, with food & snack volumes up 3%, although beverage volumes were down 4%. In Europe & Sub-Saharan Africa, revenues grew by 6%, with volumes up 6%. And in Asia, Middle East and North Africa, revenues were also up 6%, with volumes growing 7%.
CEO Indra Nooyi noted: “Although we continued to face challenges in North America beverages, the sector had sequential improvement in top line momentum since the fourth quarter of 2017. We continued investing in and growing share in a number of faster-growing, future-facing categories.”
However, Nooyi also admitted that “competitively we recognise the need to step up investments in core carbonated soft drinks, which we intend to responsibly do. We believe our plans will drive further improvement as the year progresses.”
CFO Hugh Johnston added that the company plans to increase its marketing spending, admitting that it had lost some market share to Coca-Cola. Talking to The Street, he noted: “Most recently in the last one to two years, our primary competitor has been investing heavily in colas and it has had an implication on our market share. We really started to see it in the latter half of last year and then into the first quarter of this year”. He said PepsiCo had already raised its ad spending by a double-digit percentage in the first quarter. (www.kamcity.com)
