Pep­siCo tops sales es­ti­mates as strong snack brands bear boost

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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.

NEW YORK — 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 Dec. 31, or­ganic sales at Pepsi’s Fri­toLay 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.

“We are broadly im­pressed with Pepsi’s abil­ity to de­liver bot­tom­line re­sults de­spite the dy­namic re­tail en­vi­ron­ment and their con­tin­ued un­der­per­for­mance in the bev­er­ages,” Wells Fargo an­a­lyst Bon­nie Her­zog said.

For 2018, the com­pany ex­pects earn­ings of $5.70 per share, slightly above an­a­lysts’ es­ti­mates of $5.67. Pep­siCo fore­cast or­ganic rev­enue to be largely un­changed com­pared with 2017.

The com­pany also said it would give up to a $1,000 cash bonus to some US-based em­ploy­ees, as it ben­e­fits from the tax re­form.

Shares of Pep­siCo were slightly higher on Tues­day morn­ing.

REUTERS

BOT­TLES of Pepsi are pic­tured at a gro­cery store in Pasadena, Cal­i­for­nia, US on July 11, 2017.

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