PepsiCo’s Fourth-Quarter Sales Beat Estimates on Broad Gains

Bookmark

PepsiCo Inc. reported stronger-than-expected fourth-quarter revenue as consumers kept their pantries full with the company’s snack and cereal offerings through the extended global lockdown.

  • Sales rose 8.8% to $22.46 billion in the quarter, PepsiCo said, topping the $21.81 billion average estimate from analysts. The maker of Lay’s potato chips and Tropicana juice announced a 5% increase in its annualized dividend.

Key Insights

  • In an interview, Chief Financial Officer Hugh Johnston characterized the performance as “one of our best quarters.” He added: “People have to eat, they have to drink, and we figured out how to get it to them in the channels where they want it.”
  • Underscoring this, organic sales rose 5% at the Frito-Lay division, and the company reported an 8% increase at Quaker Foods North America. For 2021, the company forecast a mid-single digit increase in organic revenue and a high-single digit gain in earnings per share excluding currency fluctuations.
  • The company’s North America beverage business, which had struggled amid closed restaurants, stadiums and other public venues, reported 5.5% organic revenue growth in the quarter. PepsiCo said that productivity savings and lower marketing and commodity costs helped fueled a 19% jump in operating profit.
  • However, costs related to the coronavirus pandemic reduced operating profit growth by 2 percentage points at Frito-Lay and Quaker Foods. Johnston said Pepsi had almost $800 million in Covid-19 costs last year, which includes a credit reserve, protective equipment for workers and the costs of absenteeism.

Market Reaction

  • PepsiCo shares fell less than 1% in New York trading Thursday. The stock fell 7.1% this year through Wednesday, trailing the 4.1% rise of the S&P 500 Index.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.