PepsiCo, the US-based food and beverage giant, today (15 February) a slowing in its annual underlying sales growth but an improvement in its core profitability.

PepsiCo FY organic revenue growth

Source: PepsiCo SEC filings

The company behind brands including Lay's crisps and Quaker cereal reported a 3.7% rise in revenue on an organic basis, a deceleration in the growth rate it had seen in 2015 and 2014.

PepsiCo saw its organic revenue rise across all divisions, except for its Quaker Foods North America business, where sales were flat year-on-year, compared to up 1% in 2015.

Organic revenue from PepsiCo's operations in Latin America and from its North America Beverages units grew slower in 2016 than a year earlier.

PepsiCo FY group results

Source: PepsiCo SEC filings

The group posted a 0.4% dip in net revenue on a reported basis, with its top line dampened by exchange rates and the impact of the deconsolidation of its business in Venezuela.

PepsiCo's reported operating profit and net profit grew year-on-year, in part due to the company lapping impairment charges on its Venezuelan business that were booked in 2015.

The company recorded an improvement in operating margin, which can be seen in the table below.

PepsiCo FY operating profit margin

Source: PepsiCo SEC filings

PepsiCo FY results by division

Source: PepsiCo SEC filings

On a reported basis, PepsiCo saw net revenues rise from its Frito-Lay North America snacks arm, from its Quaker Foods North America cereal business and from its North America Beverages operations.

However, when factors including exchange rates, M&A and the extra trading week in PepsiCo's 2016 financial year are stripped out of the numbers, all divisions grew revenue, bar Quaker Foods North America.

PepsiCo reported higher snacks volumes from each of the divisions selling snacks - Frito-Lay North America and the three geographic units of Latin America, Europe and sub-Saharan Africa and AMENA, or Asia, the Middle East and north Africa.

Frito-Lay North America, Quaker Foods North America and North America Beverages all saw their divisional operating profit grow year-on-year. PepsiCo said its Frito-Lay North America arm benefited from "productivity gains" and lower raw-material costs. Those two factors also helped the profitability of Quaker Foods North America, which was also lapping the 2015 results, which included an impairment charge on PepsiCo's former US dairy venture with Muller, which ended in late 2015.

PepsiCo described the year-on-year comparison of the divisional operating profit from Latin America as "not meaningful" due to the impairment charges in Venezuela. Productivity gains helped profits from PepsiCo's businesses in Europe and sub-Saharan Africa, which felt the impact of higher raw-material costs in local currency terms.

The slump in profits from PepsiCo's operations in Asia, the Middle East and north Africa was mainly due to an impairment charge on the company's stake in Tingyi-Asahi Beverages Holding Co. However, the core operating profit from the unit still fell amid "operating cost inflation" and higher spending in marketing.

Outlook

PepsiCo provides forecasts for non-GAAP metrics, saying factors including exchange rates and commodity mark-to-market adjustments mean it cannot predict its GAAP results.

The company expects organic revenue growth of "at least 3%" in 2017 - compared to the 3.7% it posted for 2016.

PepsiCo also forecast core earnings per share of $5.09 this year, up from the $4.85 it generated last year.

Shares in PepsiCo had dipped 0.86% in pre-market trading.