PepsiCo has reported a 16% increase in net income for Q2. This quarter marks the seventh consecutive quarter in which PepsiCo has managed double-digit earnings growth. Despite its competitors’ well-publicized difficulties, all its divisions showed healthy volume gains. With the Quaker acquisition scheduled for completion soon, the snack and beverages group looks likely to keep this high-growth trend going.
Q2 saw PepsiCo’s net income jump 16% to $652 million, up from $563 million this time last year. Earnings per share rose by 14% to 44 cents, compared to 38 cents a year earlier.
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The Pepsi-Cola international division did not do as well as the group overall, failing to achieve any sales growth. The company blamed adverse currency movements for the results. However, it still managed to increase operating profits by 21%, thanks partly to the sale of land after the closure of its Japanese concentrate plant.
Pepsi-Cola North America had a much happier tale to tell as sales reached $962 million, up one-fifth from last year. The company attributed this largely to the acquisition of SoBe and the launch of Mountain Dew Code Red. Operating profit also rose a healthy 11% to $249 million.
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By GlobalDataFrito-Lay, which makes up more than half of PepsiCo’s revenues, did well in both domestic and international markets. Operating profit in the North American division grew 10% to $477 million, thanks to 6% sales growth and a fall in potato, oil and packaging prices. Internationally, Frito-Lay did even better. Operating profit was up 16% to $134 million, compared to $115 million last year. Sales were up 5%, from $1.0 billion to $1.1 billion.
Steve Reinemund, CEO and Chairman, was enthusiastic about the company’s continued growth, commenting, “We believe our strategies are on target and we are clearly focused on execution in the marketplace.”
With volume gains across all of its divisions, PepsiCo is not showing signs of any major problems. Its continuing diversification away from the flat US cola market is allowing it to take advantage of more swiftly growing segments and the Quaker acquisition, if it is finally approved, will only accelerate this process. PepsiCo looks set to continue its run of high growth quarters.
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