PepsiCo on Thursday reported its quarterly sales grew by more than 5% as consumers bought more of its Tostitos and pancake mixes.
The food and beverage giant also provided an outlook for its earnings and revenue for the first time since yanking its forecast in April, when coronavirus pandemic lockdowns hit sales.
Shares of the company rose 1% in premarket trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.66, adjusted, vs. $1.49 expected
- Revenue: $18.09 billion vs. $17.23 billion expected
Pepsi reported fiscal third-quarter net income of $2.29 billion, or $1.65 per share, up from $2.1 billion, or $1.49 per share, a year earlier. The company spent $147 million this quarter on costs associated with the coronavirus pandemic, like more expensive labor and buying personal protective equipment.
Excluding items, the company earned $1.66 per share, beating the $1.49 per share expected by analysts surveyed by Refinitiv.
Net sales rose 5.3% to $18.09 billion, topping expectations of $17.23 billion. Organic revenue, which strips out the impact of foreign currency, acquisitions and divestitures, grew 4.2% in the quarter.
Both its Frito-Lay and Quaker Foods businesses reported organic revenue growth of 6%, despite economies opening up and consumers feeling more comfortable leaving their homes. Frito-Lay saw higher sales in its Tostitos, Cheetos and Doritos, while Quaker Foods’ pasta and macaroni and cheese dishes reported double-digit sales growth.
CFO Hugh Johnston said on CNBC’s “Squawk Box” that the company is struggling to keep up with demand for its new Cheetos macaroni and cheese.
“We’re trying to get capacity as quickly as we can — that’s how popular this is,” he said.
Its North American beverage unit’s organic sales rose by 3% in the quarter. Its Bubly sparkling water brand, Lipton tea and Starbucks licensed products all saw double-digit sales growth. The company also said that Bubly, Gatorade Zero and Mountain Dew Zero Sugar combined have surpassed $1 billion in sales this year. CEO Ramon Laguarta said that more people are exercising, particularly at home.
Pepsi’s international business reported organic sales growth of 4%, fueled by higher demand for snacks. Laguarta said the company expects a longer recovery for its beverage business because of reinstated pandemic restrictions. For example, Spain said Tuesday it would lock down Madrid and surrounding areas because of a rise in Covid-19 cases. Still, Laguarta said that new local restrictions aren’t impacting the business as dramatically as in April and May.
For the remainder of fiscal 2020, Pepsi is now expecting organic revenue growth of 4%, in line with its prior outlook, and core earnings per share of $5.50, down 38 cents from its original forecast.
Read the full earnings report here.
Correction: CFO Hugh Johnston spoke on “Squawk Box.”