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PepsiCo's Q3 profit beats market expectations

Published: 09:56 17 Oct 2012 EDT

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PepsiCo, Inc.'s (NYSE:PEP) fiscal third-quarter earnings topped analysts' expectations, but noted sales were impacted by foreign exchange rates and a refranchising of its brands in China and Mexico.

The Purchase, New York-based company, maker of Lay's potato chips, Cap'n Crunch cereal and Tropicana orange juice, posted a five per cent drop in earnings to $1.90 billion or $1.21 a share, on $16.65 billion in revenue.

These results compare to a year-prior net income of $2 billion or $1.25 a share, on $17.5 billion in sales. 

Revenue slid five per cent due to unfavourable currency exchange rates and refranchising of its business in China and Mexico. 

Bloomberg analysts projected a per-share profit of $1.16, on revenue of $17 billion during the 12-weeks ended September 8.

"PepsiCo is diligently executing the strategy we set forth at the start of the year, and we remain on track to achieve our full-year targets," said PepsiCo chairman and CEO Indra Nooyi.

"We remain focused on our five priorities. We will continue to invest aggressively to build our brands, accelerate innovation to drive growth, focus on execution and deliver our productivity agenda while returning  cash to shareholders."

Shares fell 0.50 per cent to $69.95 each on New York's Stock Exchange. 

The PepsiCo Americas division – which offers Lay's and Ruffles potato chips, Doritos and other snacks – posted $5.76 billion in sales, up 2.5 per cent.

Revenue from its beverage segment fell seven per cent to $5.53 billion from $5.94 billion a year earlier.

In Europe, revenue dropped six per cent. Sales in Asia, the Middle East and Africa decreased 21 per cent.

For fiscal 2012, the company expects per share earnings to drop five per cent from the $4.40 earned in 2011. 

It also projects revenue growth in the low single digits.

Analysts are forecasting a per share profit of $4.07, on $65.8 billion in revenue for fiscal 2012.

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