Pepsico tops sales estimates as snack brands provide boost

LOSANGELES:PEPSICO Inc.’s snacks are having to pick up more of the slack Pepsico Inc.’s sales topped Wall Street forecasts in the fourth quarter, as higher demand at its snacks business that makes Doritos and Cheetos made up for a decline in sales of sugary drinks.

As consumers increasingly ditch sodas and sugary drinks, Purchase, New York-based Pepsi has sharpened its focus on snacks as well as healthier beverages.

Indeed, Pepsi rival Dr Pepper Snapple agreed to merge with Keurig Green Mountain last month in a $21 billion deal as a way to lower its reliance on soft drinks.

However, asked to comment on the deal by an analyst on Tuesday’s earnings call, Pepsico Chief Executive Indra Nooyi said: “I’m sure there is some towering strategic logic, but we are still searching for it.”

In the quarter ended December 31, organic sales at Pepsi’s Frito-lay snacks division rose 5%, buoyed by demand for salty snacks and as prices rose 2%. Organic sales exclude the impact of currency, acquisitions and divestitures.

The snacks business contributes about 25% of overall revenue.

Organic sales at Pepsico’s North American beverages business that sells Gatorade and Mountain Dew dipped 3%.

Total revenue rose slightly to $19.53 billion, topping analysts’ average estimate of $19.39 billion, according to Thomson Reuters I/ B/E/S. Pepsico recorded a loss of $710 million, reflecting a $2.5 billion one-time charge related to new US tax laws, compared to a year-earlier profit of $1.40 billion.

Excluding one-time items, the company earned $1.31 per share, edging past analysts’ estimates of $1.30.