PepsiCo : sees strong annual profit as snacks, sodas thrive in pandemic
October 01, 2020 at 10:29 am EDT
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PepsiCo Inc forecast full-year profit above expectations on Thursday after a rebound in soda sales and increased demand for snacks during the COVID-19 crisis helped drive quarterly sales higher.
People spending more time working and studying from home has led to a rise in demand for salty snacks, boosting demand for PepsiCo's Tostitos, Cheetos and Doritos from households across North America.
Sales of snacks under the company's Frito-Lay North America unit, rose 7% in the third quarter, while higher demand for breakfast foods led to a 6% rise at its Quaker Foods business.
"At home consumption trends have remained strong despite the measured reopening of economies and activities in certain areas," Chief Executive Officer Ramon Laguarta said.
Higher demand for Starbucks branded iced coffee, as well as low calorie versions of Gatorade and Mountain Dew helped boost revenue of PepsiCo's North America beverage business by 6%.
That helped offset a slump in sales at restaurants, which has been hurting the unit's revenue since the start of the pandemic.
The company's decision to drop the "Aunt Jemima" branding from its pancake mix and syrups in June after being criticized as a racist stereotype did not impact product sales, Chief Financial Officer Hugh Johnston told Reuters.
PepsiCo forecast full-year core earnings of $5.50 per share, above expectations of $5.36 per share, while warning that pandemic-related costs may continue to weigh on earnings next year.
Overall net revenue rose more than 5% to $18.09 billion in the quarter ended Sept. 5, beating analysts' expectations of $17.23 billion, according to IBES data from Refinitiv.
Attributable net profit rose 9.1% to $2.29 billion. Excluding items, the company earned $1.66 per share, beating expectations of $1.49 per share.
PepsiCo, Inc. is one of the worldwide leaders in producing non-alcoholic beverages and snacks. Net sales break down by area of activity as follows:
- North America (60.8%): sale of beverages (49.7% of net sales; sodas, concentrated juices, water, tea and coffee-based beverages; Aquafina, Diet Mountain Dew, Diet Pepsi, Gatorade, Gatorade Zero, Mountain Dew, Pepsi, Propel brands, etc.), snacks (44.7%; chips, tortillas and pretzels; Lay's, Doritos, Tostitos, Cheetos, Fritos, Ruffles, etc.), and cereals (5.6%; ready-to-eat cereals, rice, wheat, etc.);
- Europe (14.5%): sale of snacks (Cheetos, Chipita, Doritos, Lay's, Ruffles and Walkers brands) and beverages (7UP, Diet Pepsi, Lubimy Sad, Mirinda, Pepsi and Pepsi Max);
- Latin America (12.7%): sales of snacks (Cheetos, Doritos, Emperador, Lay's, Mabel, Marias Gamesa, Ruffles, Sabritas, Saladitas and Tostitos brands) and beverages (7UP, Gatorade, H2oh!, Manzanita Sol, Mirinda, Pepsi, Pepsi Black, San Carlos and Toddy)
- Asia/Pacific/Australia/New Zealand (6.7%): sale of snacks (BaiCaoWei, Cheetos, Doritos, Lay's and Smith's brands), beverages and syrups (7UP, Aquafina, Mirinda, Mountain Dew, Pepsi and Sting);
- Africa/Middle East/South Asia (5.3%): sale of snacks (Chipsy, Doritos, Kurkure, Lay's, Sasko, Spekko and White Star brands) and beverages (7UP, Aquafina, Mirinda, Mountain Dew and Pepsi).
Net sales are distributed geographically as follows: the United States (57%), Mexico (7.7%), Canada (4.1%), Russia (3.9%), China (3%), the United Kingdom (2.1%), Brazil (1.9%), South Africa (1.9%) and other (18.4%).