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.  

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