September 29, 2016 / 10:41 AM / 3 years ago

PepsiCo sales helped by demand for healthier snacks and drinks

(Reuters) - PepsiCo Inc PEP.N reported better-than-expected quarterly net revenue and profit on Thursday, helped by higher demand in North America for its lineup of beverages and snacks with fewer calories and more natural ingredients.

Cans of Pepsi are displayed at the Roland Garros stadium in Paris, France, May 28, 2016. REUTERS/Jacky Naegelen/File Photo

The company also raised its 2016 adjusted profit forecast.

PepsiCo and other processed-food companies are investing heavily to develop products to meet the changing tastes of consumers, who are increasingly seeking healthier options.

PepsiCo that about 45 percent of its net revenue now came from “guilt-free” products - beverages that have fewer than 70 calories per 12 ounces and snacks that have lower amounts of salt and saturated fat.

PepsiCo’s healthier brands include Propel flavored-water, Naked Cold Pressed juice and its “Simply” line of foods featuring products such as organic salsa and chips made from black beans, which have helped drive sales in recent quarters.

The company said it was expanding its offerings of baked chips, which include Baked Lays and Baked Cheetos, to more markets outside the United States.

“Consumers want healthy and these companies have to give them what they want,” Edward Jones analyst Jack Russo said.


PepsiCo’s businesses in Russia, China and India improved in the third quarter, while Western Europe “is not getting worse,” Chief Executive Indra Nooyi said on a conference call.

North America is the company’s biggest market, accounting for about 60 percent of revenue in 2015.

However, the company’s revenue fell for the eighth straight quarter, hurt by high inflation in some Latin American economies such as Venezuela and Argentina and unfavorable exchange rates.

Net revenue fell about 2 percent 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 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 three months 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, PepsiCo earned $1.40 per share, beating the average analyst estimate of $1.32.

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

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

The company’s stock closed 0.3 higher at $107.76, up more than 15 percent over the year.

Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Don Sebastian

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