It’s the second straight earnings day surprise this year for the usually steady-as-she-goes PepsiCo.
Shares of the beverage and snacks giant popped 3% in pre-market trading on Thursday amid strong top and bottom line beats in its second-quarter earnings report. The company benefited from price increases on its various lines of products and new innovations in the Frito-Lay division.
Similar to when the company last reported, it materially hiked its full-year outlook, as to suggest the momentum in the business will be sustained.
“Our strong performance and the progress we are making on our strategic priorities gives us confidence that investments we are making to become an even faster and stronger and even better organization by winning with Pepsico Plus are working,” PepsiCo CEO Ramon Laguarta said in a statement.
Laguarta’s long-time colleague and CFO Hugh Johnston will be on Yahoo Finance Live today at 9 a.m. ET to discuss the results and outlook.
The earnings rundown
Net Sales: +10.4% year over year to $22.3 billion vs. estimates for $21.68 billion
Frito-Lay North America Sales: +14% year over year to $5.90 billion vs. estimates for $5.77 billion
Quaker Foods North America Sales: +1% year over to $684 million vs. estimates for $704 million
North America Beverages: +10% year over year to $6.75 billion vs. estimates for $6.64 billion
Europe Sales: +13% year over year to $3.42 billion vs. estimates for $3.14 billion
Latin America Sales: +18% year over year to $2.89 billion vs. estimates for $2.7 billion
Africa/Middle East Sales: – 8% year over year to $1.57 billion vs. estimates for $1.62 billion
Asia Pacific Sales: +1% year over year to $1.12 billion vs. estimates for $1.12 billion
Organic Sales Growth: +13% year over year vs. estimates for +9.75%
Core EPS: +15% year over year to $2.09 vs. estimates for $1.96
What else caught our attention
Organic sales growth for 2023 is seen at 10%, up from 8% previously.
Core EPS growth for 2023 is seen at 12%, up from 9% previously.
Profit growth at North America Beverages of 9% was slower than the 10% increase in organic sales.
What Analysts Were Saying Pre-Earnings
“PepsiCo exited 1Q results (organic sales were +14.0%) expressing confidence on driving toward its FY23 +8% organic sales growth guidance and sustaining growth over time that is at least in-line with its 4%-6% long term target driven by investments in sales growth (marketing and new products) and the ongoing broadening of markets that have scale and size enough to make an impact at the enterprise level. In 2Q we forecast +9.8% organic sales growth (mostly pricing) with upside potential in Latin America (we are modeling +11.0% but our quarter end checks imply strength in Mexico and Brazil) and downside potential in Pepsi Beverages North America where volumes decelerated in measured channels for carbonated soft drinks and Gatorade. PepsiCo previously called out Gatorade transition from warehouse to direct distribution (retailers carry less inventory) and de-emphasis of multi-pack water as volume drags in 1Q. We expect this to moderate but could still be a factor in 2Q. Overall, we think international momentum is strong enough to potentially drive modest upside to our organic sales forecast.” Bryan Spillane, Bank of America
“We continue to believe PEP is a core defensive holding for investors looking for HSD/LDD compounders – a much stronger profile than just 4 or so years ago. The bull case we articulated in our 2020 upgrade has borne out, as the firm’s strong financials and commercial momentum has allowed it to lean-in and emerge with strong momentum.” Robert Ottenstein, EvercoreISI
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email [email protected]
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Source: https://finance.yahoo.com/news/pepsico-lifts-profit-forecast-after-q2-sales-beat-103818431.html