US: PepsiCo Q1 earnings up on revenue growth
PepsiCo yesterday (26 April) reported that first quarter net income increased by 12%, while EPS was up 13%, driven by a 9% increase in net revenue. Each of the company's operating divisions contributed top and bottom-line growth.
Operating profit grew 21%, driven by revenue growth, acquisitions and two points of foreign currency translation benefit. These positives were offset somewhat by increased raw material costs.
Chairman and CEO Steve Reinemund said, "We continue to see solid top-line momentum across our businesses, driven by product innovation and strong marketplace execution. Importantly, we're also seeing good profit performance despite continued pressure from inflation in some of our key input costs. Overall, we're very pleased with the results in the quarter, and remain confident in the outlook for 2006."
Frito-Lay North America reported a 6% growth in revenues, led by strong double-digit growth in Sun Chips multigrane snacks and Quaker Chewy granola bars and rice cakes and high-single-digit growth of Tostitos tortilla chips. Cheetos reported mid-single-digit growth, while Lay's revenue increased in the low-single-digits an Doritos revenues declined in the mid-single-digits.
Operating profit grew in line with revenue growth, reflecting increased labour and benefits charges and higher costs for cooking oil.
Quaker Foods North America reported a 6% increase in revenue driven by a strong brand performance, the company said.
PepsiCo Beverages North America increased its sale volume by 5% on strong non-carbonated drinks sales.
A solid performance from beverages and snacks internationally drove profits outside North America up by 21%.
Snacks volume increased by 7%, driven by high single-digit growth in the UK, strong double-digit growth in Turkey, Russia and Australia and low single-digit growth in Mexico. The company said that international acquisitions were an important growth stimulator.
International beverages sales volume increased by 16% for the quarter, with notable gains in China, the Middle East, India and Venezuela.
The company reaffirmed its 2006 earnings guidance of EPS of US$2.93. Cash generated by operating activities in 2006 is expected to exceed $6.2bn.
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