PepsiCo Raises Profit Forecast for 2016

30 Sep 2016 --- A jump in revenues in the US, China and Russia and strong demand for its healthier products in the third quarter helped PepsiCo raise it profit forecast for 2016.

PepsiCo said it now expects adjusted earnings per share to grow by 10 percent in 2016, as opposed to nine percent previously stated.

But overall revenues at the Tropicana-maker fell in the quarter, as it was adversely impacted by high inflation in Latin American countries as well as unfavorable exchange rates.

Revenue dropped two percent to $16.03bn in the quarter, though this was slightly ahead of analysts’ forecasts.

Profits were up more than three-fold year-on-year to $1.99bn.

“We are pleased with our results for the third quarter and year to date. We are executing our strategy well and managing what is in our control. Our product portfolio, geographic mix and
capability centers are enabling us to deliver balanced revenue and productivity,” said Chairman and CEO Indra Nooyi. 

“Based on our year-to-date performance and our outlook for the fourth quarter, we are raising our full-year core constant currency EPS (earnings per share) growth objective.”

Across its key divisions, organic revenues were down 0.5 percent at Quaker Foods North America (QFNA), as it was hurt by higher advertising and marketing costs.

Organic revenues were up four percent at Frito-Lay North America (FLNA), boosted by lower material costs and up two percent at North America Beverages (NAB).

There was growth in noncarbonated drinks such as Naked Juice and Pure Leaf tea, which helped offset a decline in Diet Pepsi and other fizzy drinks.

Across Europe Sub-Saharan Africa (ESSA), organic revenues were up four percent and up five percent across Asia, Middle East and North Africa (AMENA).

There was 11 percent organic growth in China and Mexico and seven percent growth in Russia.