PepsiCo on Friday reported quarterly earnings and revenue that met analysts' expectations, but is forecasting weaker-than-expected earnings for 2019, like rival Coca-Cola.
The food and beverage giant is forecasting that it will earn $5.50 per share during 2019, down from its 2018 earnings per share of $5.66. Wall Street had expected the company to earn $5.86 in 2019, according to Refinitiv estimates.
Among other factors, PepsiCo called out an increased tax rate and currency headwinds as reasons for the weak outlook. Excluding currency fluctuations, it expects full-year earnings per share to decline by 1 percent. The company's earnings last year were also boosted by selling assets and lapping franchising costs.
It is targeting annual savings of at least $1 billion through 2023, which it will achieve in part through automation, changing its go-to market systems and simplifying its organization. The program is an extension of a prior savings plan that was expected to end in 2019.
The company also said in a statement that it plans to make 2019 "a year of substantial investment," including increasing marketing and advertising.
Shares of the company rose than 1 percent 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: $1.49 vs. $1.49 expected
- Revenue: $19.52 billion vs. $19.52 billion expected
The company reported net sales of $19.52 billion, matching analysts' expectations and unchanged from a year earlier.
PepsiCo's once-struggling North American beverage business continued its comeback this quarter, seeing 2 percent organic growth. The company has been increasing its spending on marketing and advertising, particularly on its Pepsi and Mountain Dew sodas. It has also been investing in its higher-growth water and sports drinks segments, with brands like Gatorade Zero and Lifewtr.
Its snack business remained strong, with Frito-Lay North America delivering 4 percent organic revenue growth. The company said that it is continuing to add more nutritious snacking options.
PepsiCo reported fiscal fourth-quarter net income of $6.85 billion, or $4.83 per share, up from a loss of $710 million, or 50 cents per share, a year earlier.
Excluding merger and integration charges, net tax benefits and other items, PepsiCo earned $1.49 per share, in line with Wall Street's expectations.
In December, it completed its $3.2 billion acquisition of SodaStream, the at-home sparkling drink maker. With the exception of the SodaStream deal, PepsiCo under former CEO Indra Nooyi largely stayed away from making deals larger than $200 million in her last few years as chief executive. Current CEO Ramon Laguarta took the reins in October.
The company also announced Friday that it is increasing its dividend by 3 percent, to $3.82 from $3.71, beginning in June.
This is breaking news. Please check back for updates.
0 Comments