US: PepsiCo upbeat on FY, despite Q1 sales, profits dip

PepsiCo has posted a slight dip in profits in its first quarter, with net sales in the period following suit.

The company, which earlier today (20 April) launched a bid to take full control of The Pepsi Bottling Group and PepsiAmericas, said that group net profits on a reported basis fell by 1% year-on-year in the three months to the end of March, coming in at US$1.14bn. Net sales in the quarter also fell by 1%, totalling $8.26bn.

Operating profits, however, were up by 2% on a reported basis, at $1.59bn.

"I am pleased with PepsiCo's overall performance in the quarter," said Indra Nooyi, PepsiCo's chairman and CEO. "Our portfolio breadth, geographic reach and operating agility enabled us to deliver strong performance in a challenging global macroeconomic environment."

By unit, PepsiCo Americas Beverages performed "in-line" with expectations in the quarter, the company said, as the unit completed the "restaging" of its North America Beverage portfolio. While operating profits decreased to $425m from $504m a year earlier, sales also slowed, to $2.09bn from $2.36bn. In North America, volume performance was impacted by a mid-single-digit decline in CSDs and a double-digit decline in sports drinks.

In Europe, beverage volumes grew by 7%, thanks primarily to last year's Lebedyansky acquisition in Russia, which contributed 14 percentage points to division growth. Volume growth in the UK and Germany was more than offset by declines in the Ukraine and Russia.

Asia/Middle East/Africa (AMEA) volumes were up by 10%, with growth recorded broadly across geographies and categories, reflecting double-digit growth in the Middle East and India, as well as high-single-digit growth in China.

Looking forward, PepsiCo said it was reaffirming its full-year 2009 guidance for both net revenue and core EPS of mid- to high-single-digit constant currency growth.

"In spite of the economic slowdown, all of our businesses are performing at or above expectations, which gives me confidence in reaffirming our full-year guidance, Nooyi added.

The company's guidance does not include the impact of the proposed transactions with The Pepsi Bottling Group and PepsiAmericas.