US: PepsiCo earnings fall on increased ad spend
- Earnings down 5%
- Core operating profit down 8%
- Net revenue down 5%
PepsiCo earnings dip
PepsiCo booked a 5% drop in third-quarter earnings today (17 October) as it increased its spending behind flagship brands.
The company said earnings totalled US$1.9bn, or $1.21 per share, in the three months to 8 September, down from $2bn in the comparable period of last year. Core EPS totalled $1.20 in the period, beating consensus estimates of $1.16 per share.
Core operating profit was down 8%, due to higher input costs, increased advertising spending and higher pension costs.
Profits were hit by higher levels of investment in the business as part of a three-year turnaround push, PepsiCo revealed. The maker of Quaker oats and Frito-Lay snacks has increased its investment in advertising it looks to bolster the performance of its key brands.
Excluding the impact of currency exchange and divestures, revenue was up by a total of 5% in the quarter. Volumes contributed 1% and pricing action contributed 4%.
Reported net revenue declined 5% to $16.65bn as structural changes - particularly in Mexico and China - weighed 5% and currency exchange trimmed another 5% off sales.
PepsiCo Reports Third Quarter 2012 Results
-- Third quarter reported EPS of $1.21 and core(1) EPS of $1.20
-- Company reaffirms 2012 core constant currency(1) net revenue and core constant currency EPS guidance
-- Reflecting the impact of previously announced structural changes and negative foreign exchange translation, reported net revenue declined 5 percent, in line with expectations. Excluding these impacts, organic(1) net revenue grew 5 percent
-- Company expects to return more than $6 billion to shareholders through dividends and share repurchases in 2012
-- Company expects to deliver more than $1 billion in productivity savings in 2012 and $3 billion in savings by 2015
PURCHASE, N.Y., Oct. 17, 2012 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP) today reported a decline in third quarter net revenue of 5 percent, reflecting a negative 5-percentage-point impact from previously announced structural changes (primarily beverage refranchisings in China and Mexico), and a negative 5-percentage-point impact from foreign exchange translation. Excluding these items, third quarter net revenue grew 5 percent on an organic basis.
Reported EPS was $1.21 and core EPS was $1.20. Management reaffirmed both its 2012 core constant currency net revenue and core constant currency EPS guidance and stated that its 2012 strategic initiatives are on track.
"PepsiCo is diligently executing the strategy we set forth at the start of the year, and we remain on track to achieve our full-year targets," said PepsiCo Chairman and CEO Indra Nooyi. "Our disciplined pricing and sustained investment in brand building drove 5 percent organic net revenue growth reflecting 1 percent organic volume growth and 4 percent effective net pricing.
"We remain focused on our five priorities. We will continue to invest aggressively to build our brands, accelerate innovation to drive growth, focus on execution and deliver our productivity agenda while returning cash to shareholders."
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Original source: PepsiCo
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