Pepsico Q3 profit tops estimates, revenue misses; backs growth forecast
2013-10-17 11:03:48
Food and beverages giant PepsiCo, Inc. (PEP) reported Wednesday a slight increase in third-quarter profit with a 1.5 percent increase in net revenues. Core earnings per share topped analysts' consensus estimates, while top line missed their view.
Further, the company backed its fiscal 2013 earnings growth forecast. Pepsico added that it expects to return approximately $6.4 billion to shareholders through dividends and share repurchases in 2013.
Chairman and CEO Indra Nooyi said, "PepsiCo has delivered double-digit core constant currency earnings per share growth year to date, despite ongoing macro-economic volatility in many markets... Our year-to-date results give us confidence in achieving our 2013 financial goals and we continue to believe that we have the right strategies in place to create long-term value for our shareholders."
Peer Coca-Cola Co. (KO) reported Tuesday a 6% increase in profit for the third quarter reflecting increased worldwide volumes, even as revenues declined.
In its third quarter, net income attributable to PepsiCo edged up 1 percent to $1.913 billion from $1.902 billion last year, and earnings per share grew 1.5 percent to $1.23 from prior year's $1.21.
Core net income, which excluded certain items, was $1.936 billion or $1.24 per share, while prior year's core net income was $1.893 billion or $1.20 per share. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $1.17 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter grew 1.5 percent to $16.91 billion from $16.65 billion in the prior year quarter. Twelve analysts had consensus revenue estimate of $16.96 billion for the quarter.
The results reflected the negative impacts of foreign currency translation and structural changes mainly in Vietnam. On an organic basis, revenues grew 3.3 percent. Total volume declined 1 percent.
The company noted that organic revenue in the developing and emerging markets increased 9 percent in the quarter.
Gross margin increased 5 basis points, while operating margin declined 35 basis points. However, core gross margin expanded 70 basis points in the quarter.
Looking ahead for fiscal 2013, Pepsico continues to expect 7 percent core constant currency earnings per share growth versus its fiscal 2012 core earnings per share of $4.10.
Organic revenue is now expected to grow mid-single digits versus 2012, consistent with the company's long-term guidance, excluding the impact of structural changes and foreign exchange translation.
Analysts expect the company to report earnings of $4.35 per share and revenues of $66.88 billion for fiscal 2013.
Based on the current foreign exchange market consensus, the company expects foreign exchange translation to have an unfavorable impact of around 2 percentage points on its full-year core earnings per share and net revenue growth.
For 2013, the company expects low-single-digit commodity inflation, and productivity savings of approximately $900 million.
Further, the company said it expects to return a total of $6.4 billion to shareholders in 2013 through dividends of approximately $3.4 billion and share repurchases of approximately $3.0 billion.
Pepsico shares closed Tuesday's trading at $80.60, down $0.49 or 0.60 percent. In pre-market activity, shares gained $0.73 or 0.91 percent and traded at $81.33.