PepsiCo has booked an 18% increase in first-half net income after a slight increase in sales and lower costs.
The company said today (24 July) net profit rose to US$3.1bn in the six months to 15 July, up from $2.6bn in the comparable period of last year. The bottom line was boosted by lower income tax costs, improved margins and lower amortisation expenses. Operating profit was up 10% to $4.5bn.
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The US food and drinks group revealed revenue in the half increased 2%, climbing to $16.8bn.
The company has recently come under pressure from activist investor Nelson Peltz, who has argued the firm should divide its drinks and snack business. According to Peltz, the diverse business models of PepsiCo’s low-growth drinks arm and high-growth food operations are at odds, putting pressure on how resources are allocated. Peltz has argued the food side of the business could then be merged with Mondelez International to create a global snacks powerhouse.
Management has resisted these calls. In the second quarter, PepsiCo revealed its organic revenue growth rose 3% in food and just 1.5% in drinks. However, the group was quick to emphasise the value that it is delivering to shareholders.
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“PepsiCo delivered another quarter of mid-single-digit organic revenue growth, driven by our balanced food and beverage product portfolio and global geographic footprint,” CEO Indra Nooyi said.
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By GlobalDataPepsiCo reaffirmed that it expects to deliver core constant currency EPS growth of 7% during fiscal 2013.
Click here to view our analysis on the spat between Peltz and PepsiCo, or check back later to hear what management had to say during today’s conference call to discuss the result.
