PepsiCo this morning (7 October) posted rises in both sales and profits for its third quarter, driven in part by the acquisition of its two anchor bottlers earlier this year. Here we take a closer look at the soft drink giant’s results.

  • Volume in North America, excluding the incremental volume from PepsiCo’s agreement with Dr Pepper Snapple Group, remained flat in the quarter, achieving only a one percentage point improvement versus the second quarter of 2010. In the US, Pepsi Americas Bottling (PAB) realised a positive volume share swing versus its “closest competitor” in measured channels, the firm said, aided by the launch of Gatorade’s G Series.
  • Reported beverage volume in Europe grew 17%, while volume excluding the impact of incremental brands related to PepsiCo’s acquisitions of PBG and PAS increased 10% – a sequential improvement of six points from the second quarter of 2010. While both Eastern and Western Europe experienced gains, most of the positive growth came from Eastern Europe, driven by a strong commercial calendar combined with an unusually hot summer.
  • In Asia, Middle East and Africa (AMEA) volume gains in both snacks and beverages drove a strong top-line performance. Operating profit growth however, declined, impacted by the step-up of investments in emerging markets. Beverage volume growth benefited from high-single-digit growth in China, which was driven by strong growth in both carbonated and non-carbonated beverages.
  • The creation of a ‘Global Nutrition Group’ was also announced by PepsiCo today, in a bid to allow it to deliver innovation in the areas of fruits and vegetables, grains, dairy and functional nutrition. Based in Chicago, it will be run by PepsiCo’s chief scientific officer, Dr. Mehmood Khan, who has been named CEO of the new group and retains responsibility for the company’s research and development organisation.
  • For fiscal 2010, the company is targeting an 11% to 12% growth rate for core constant currency EPS from its fiscal 2009 core EPS of US$3.71, which is within the previous guidance range of 11 to 13%. Based on current spot rates, foreign exchange translation would represent a one percentage point unfavourable impact on the company’s full-year, core EPS. As a result, PepsiCo expects growth in core EPS for the year to be in the 10% to 11% range.

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