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PepsiCo's Q3 fends off detractors

Thursday, October 09, 2014 - 01:52

The world's largest snack maker turned in better-than-expected Q3 numbers as it continues to battle calls for a split into two businesses. Jeanne Yurman reports.

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Bubbling up this morning - earnings from the world's largest snack maker. Pepsico's profit beat the Street- as they have for the past year - boosted by snack sales, which also bested Street forecasts at more than $17 billion. On top of those results, it also upped its forecast for full year per-share-profit growth. But all of this is unlikely to deter activist investor Nelson Peltz from the Trian Fund who's been hounding Pepsico to break into the snack and beverage businesses into two to unlock shareholder value. To fend him off Pepsico's CEO Indra Nooyi has been pursuing fierce cost cutting, increasing prices and delivering consistently better-than-expected earnings, arguing a combined Pepsico is best. Question is, can Nooyi continue to keep Peltz at bay? Over the past year, Pepsico's stock has outperformed rivals and the broader industry. However, an early take from analyst, Vivien Azer at Cowen and Company, who rates Pepsico 'outperform', says in a note that even with these results: "We believe management has about a year to improve the company's performance." The uptick in Pepsico's snack sales may not be enough to satisfy investors given the increasing slide in soda consumption amid health concerns and competition from alternatives ranging from vitamin infused drinks to coconut water. Indeed Pepsi said consumers in the key North American market chugged 1.5 percent less soda in the third quarter versus a year ago. And witness SodaStream - the home carbonation machine maker - got walloped this week after warning of weak Q3 sales. For now, Pepsico is far from such a beating with shares streaming higher in early trading.

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PepsiCo's Q3 fends off detractors

Thursday, October 09, 2014 - 01:52