Core earnings for PepsiCo Inc. (PEP) climbed 7% in the third quarter to $1.31, compared to last year's $1.22. The higher earnings were driven by robust revenue growth across its product portfolio. Further, strong pricing partially offset the commodity cost inflation.
Earnings exceeded the Zacks Consensus Estimate by a penny.
The New York-based company reported growth in volume, revenues, operating profit and earnings per share, fueled by top line gains across its worldwide snacks and beverage businesses and from the acquisition of Wimm-Bill-Dann (‘WBD’), the leading dairy and Juice Company in Russia.
Based on the third-quarter 2011 results, PepsiCo expects earnings per share growth in the high-single-digits for fiscal 2011. This fiscal estimate also considers the estimated foreign exchange translation benefit of approximately 1% point, from its fiscal 2010 core EPS of $4.13.
The company further expects that the acquisition of WBD will reap benefits.
Top Line and Margin Details
Total sales in the quarter jumped 13% to $17.6 billion from $15.5 billion in the prior-year quarter, displaying the benefits of organic volume growth, effective net pricing and favorable foreign exchange.
Revenues were also above the Zacks Consensus Estimate of $17.3 billion.
PepsiCo registered core operating profit of $3.1 billion, up 5.0% compared with $2.9 billion in the prior-year period.
Segment Details
Revenues from PepsiCo Americas Foods (‘PAF’) gained 8%, while PepsiCo Americas Beverages (‘PAB’) was up 3%, Europe soared 37% and Asia, Middle East & Africa (AMEA) jumped 25%.
Operating profit for PAF advanced 8%, while Europe and AMEA saw operating profit increase 19% and 21%, respectively. However, operating profit for PAB declined 2.5% in the reported quarter.
In the PAF segment, Frito-Lay North America (FLNA) and Latin America Foods (LAF), registered increases of 1% and 3.5% in volume, respectively, whereas strong effective net pricing led to net revenue growth and operating profit growth in the Quaker Foods North America (QFNA) segment.
PAB results reflect slight volume increase on the back of incremental pricing actions taken in the quarter across much of the portfolio. On the other hand, Europe enjoyed double-digit volume gains in both snacks and beverages, including the impact of the WBD acquisition and effective pricing, offset by input cost inflation and timing of concentrate shipments.
AMEA’s snacks volume jumped 16%, while beverage volume grew 6%, led by strong performance.
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