logo-loader

PepsiCo's Q3 results beat Street, benefits from Wimm-Bill-Dann purchase

Published: 14:36 12 Oct 2011 BST

no_picture_pai

PepsiCo (NYSE:PEP) reported strong third quarter growth on Wednesday, slightly above analysts' expectations, as the company benefited from its acquisition of Russia's Wimm-Bill-Dann and higher selling prices.

As a result of the strong quarter, PepsiCo reaffirmed its full year earnings outlook, sending its shares up 2.30% in premarket trading, to $62.35.

The company said it continues to expect high single digit earnings growth on an adjusted, per share basis. In fiscal 2010, the company posted earnings of $4.13 per share.

In a statement, PepsiCo said its guidance "reflects uncertainty regarding macroeconomic and consumer trends," adding it expects continued inflation in global commodity costs, though earnings will benefit from the Wimm-Bill-Dann deal and pricing strategies.

For the three months ending September 3, the maker of Pepsi-Cola, Tropicana, Gatorade, and Frito-Lay products, among others, posted net income of $2.0 billion, or $1.25 per share, up 4% over the $1.92 billion, or $1.19 per share, it earned a year ago.

Adjusted for certain one-time items relating to its Russian acquisition, earnings were $1.31 per share. Analysts had expected $1.29 per share for the quarter.

Revenues rose 13% to $17.58 billion, well above the $17.2 billion expected by analysts.

"We're focused on growing our business by providing consumers around the globe with great tasting products they love at a good value, and we believe this quarter's performance is a good indication that our efforts are working," commented CEO Indra Nooyi.

"We had strong revenue growth across our product portfolio and across our key geographic markets. We were able to achieve pricing to partially offset commodity cost inflation and at the same time stimulate consumer demand for our products."

Indeed, PepsiCo's worldwide snack division posted 8% volume growth in the quarter, with much help from Wimm-Bill-Dann, while worldwide beverage volume improved 4% in the three months, driven by emerging markets and the acquisition, it said.

Revenues from the company's Frito-Lay North America business grew 4% to $3.17 billion as demand in club, convenience, dollar, and drug channels was strong. A 1% increase in volume  for the Lay's, Doritos, Cheetos, and Ruffles products also helped push the segment.

Quaker Foods North America was able to report a 2% increase in revenues, to $614 million, largely on PepsiCo's pricing actions in offsetting rising commodity costs.

In Europe, the impact of the Wimm-Bill-Dann acquisition boosted sales up 37% to $3.91 billion. Snack volume rose 4%, driven by growth in Turkey and France, while beverage volume declined mid-single digits, PepsiCo said.

Meanwhile, strong gains in Mexico and Brazil helped push volume growth in the Latin America Foods segment up 3.5%. Sales in the unit, which were also aided by price realizations, hiked 19% to $1.84 billion.

In the company's Asia, Middle East & Africa segment, PepsiCo said sales rose 25% to $2.1 billion. Snack volume increased 16%, led by growth in the Middle-East, India, China, and Thailand. Beverage volume improved 6%, driven by growth in India and Saudi Arabia.

Accesso's landmark deal with SEVEN marks strategic growth in the Saudi Market

Accesso Technology Group PLC (AIM:ACSO, OTC:LOQPF) chief executive Steve Brown joins Proactive's Stephen Gunnion with details of a significant partnership with Saudi Entertainment Ventures (SEVEN). Brown noted the collaboration highlights accesso's strategy to grow its global footprint,...

21 minutes ago