PepsiCo Inc. (PEP, Financial) released its second-quarter results before the opening bell on July 13. The company's earnings and revenue both surpassed analysts' predictions.
Shares surged 1.8% to $136.90 in pre-market trading following the news.
By the numbers
The food and beverage giant recorded adjusted earnings per share of $1.32 on $15.95 billion in revenue. Analysts were anticipating EPS of $1.25 per share on $15.38 billion in revenue.
Strong performance in the North America Quaker Foods and Frito-Lay segments pushed the company’s earnings past analysts’ projections. Revenue, though it surpassed projections, dropped year-over-year as fewer customers bought drinks at restaurants or convenience stores.
Stripping out the impact of acquisitions, divestitures and currency, organic sales plunged 0.3% in the reported quarter.
Chairman and CEO Ramon Laguarta had the following to say:
“Despite being faced with significant challenges and complexities as a result of the COVID-19 pandemic, our businesses performed relatively well during the quarter, with a notable level of resiliency in our global snacks and foods business. Encouragingly, as restrictions and closures eased and population mobility improved as the quarter progressed, we also saw an improvement in our business performance and channel mix dynamics.”
Segment performance
At PepsiCo North America beverages, organic sales fell 7%, highly driven by closures of restaurants, movie theatres and sports stadiums. On the positive side, drinks like Pepsi Zero Sugar and Bubly experienced double-digit revenue growth. The segment saw its operating profit decline 37%, while volume declined 10%.
Organic sales grew 23% at Quaker Foods North America as compared to the year-ago period, helped by a rise in demand for oatmeal. The segment witnessed a gain of 55% in operating profit and 26% in volume.
Revenue remained flat in Latin America as compared to the prior-year quarter but declined 2.5% in Europe. Organic sales declined 7% in the Africa, Middle East and South Asia segment, while the Asia, Australia and New Zealand and China segments witnessed a combined 15% organic sales growth.
Guidance
PepsiCo pulled its financial forecast for fiscal 2020, citing the global uncertainty caused by the coronavirus pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
- China Vehicle Sales: Ford vs. General Motors
- Bed Bath & Beyond's 1st-Quarter Results Lag Expectations
- Key Takeaways from Levi Strauss's 2nd-Quarter Results
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.