Standing in stark contrast with Coca-Cola's disappointing recent results, PepsiCo Inc. has recorded higher than expected quarterly earnings, thanks to price increases on its popular Frito-Lay snack range and productivity improvements.
The results come one week after shareholder Nelson Peltz publicly commented that PepsiCo should buy Mondelez International and split off its soft drinks business.
Sales volume rose 3% for PepsiCo's food business and 1.5% for the beverage business. Food volumes in the Americas increased by 2% with a 1% rise in Latin America. Snack volumes increased by 6% in the Asia, Middle East and Africa region and by 3% in Europe.
Drinks volumes sales, however, faced more mixed outcomes during the quarter, with a 3.5% fall in the Americas, a 9% rise in Asia and flat volumes in Europe.
Net income was $2.01 billion, or $1.28 per share in PepsiCo's second quarter, up from $1.49 billion, or 94 cents per share a year earlier.Net revenue rose 2% to $16.81 billion, topping analysts' estimate of $16.79 billion.
Like Coca Cola, PepsiCo's drinks business was impacted by an unusually cool and wet spring, PepsiCo CFO Hugh Johnston said.
Johnston was quick to dismiss Peltz's comments on Mondelez and the drinks business, pointing instead to the strengths of the company's broad brand portfolio.
Such breadth in the portfolio helped the company to deliver strong results despite the bad weather during the quarter, according to Johnston. Gatorade sales increase when it's hot, for example, while Tropicana sales increase when it's cold.
Commenting on the second quarter results, Indra Nooyi, PepsiCo chief executive, said, "We're pleased with our performance in the second quarter and for the first half of 2013. PepsiCo delivered another quarter of mid-single-digit organic revenue growth, driven by our balanced food and beverage product portfolio and global geographic footprint."
"We continue to invest in advertising and marketing, innovation, and other marketplace initiatives to sustain our organic revenue growth and we are driving a robust productivity agenda that serves as a funding source for these investments," she added.
© 2013 - ESM: European Supermarket Magazine by Ellen Lunney
