US: PepsiCo Q3 heads north, despite NA CSD slide

PepsiCo has reported a lift in both operating profit and sales for its third quarter.

The soft drinks giant said today (11 October) that operating profit for the 12 weeks to 8 September rose by 10% on the corresponding period a year earlier, coming in at
US$2.06bn. Sales for the quarter were up 10% year-on-year at $10.17bn.

Net income for the three-month increased to $1.74bn from $1.49bn.

The results announcement marks a busy quarter for PepsiCo, the company said, with its partnerships with Unilever and Starbucks expanding internationally. "We closed on the acquisition of Sandora Beverages and, with Pepsi Americas, became the leading Ukraine beverage company," said company chairman and CEO, Indra Nooyi. "In North America, we have strengthened our hydration portfolio with major product innovations and by leveraging the reach of our bottling system."

Profits at PepsiCo Beverages North America grew by 7% in the quarter, on revenue growth of 3%. CSD volumes at the unit slid by 3% while non-carbonated beverages grew 2%. Non-carbonated volume performance was led by Lipton RTD teas and energy drinks growing strong double-digits, and Aquafina growing mid-single-digits. However, PepsiCo's Gatorade sports drinks and portfolio of juice and juice drinks both declined by mid-single digits. The juice and juice drinks decline was primarily a result of the increased pricing to offset input costs, the company said.

At PepsiCo's international division, beverage volumes grew by 8%, led by double-digit growth in Pakistan, China, the Middle East and Russia, partially offset by a slight decline in Mexico. In total, CSDs grew at a high-single-digit rate, posting growth in each of the division's four largest trademarks - Pepsi, 7-Up, Mirinda and Mountain Dew. Non-carbonated beverages grew at a double-digit rate, led by 40% growth in Lipton RTD tea and "solid" performance across the remaining non-carbonated portfolio.

For the 36 weeks to 8 September, operating profit at the company hit $5.44bn from $4.91bn a year earlier, while sales rose to $27.13bn from $24.57bn. Net income reached $4.4bn from $3.81bn.

Moving forward, the company reiterated its previous guidance of full-year core earnings of at least $3.35 per share.