PepsiCo (PEP) Q3 Earnings Top On Lower Cost, Sales Let Down

PepsiCo, Inc. (PEP – Free Report) reported mixed third-quarter 2017 (ending Sep 9) results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. Nonetheless, this is the sixth consecutive quarter of positive earnings surprise.


PepsiCo’s third-quarter core earnings per share (EPS) of $1.48 beat the Zacks Consensus Estimate of $1.42 by 4.2%. Core earnings grew 6% year over year, mainly on better operating efficiency. In constant currency terms, adjusted earnings grew 7%.

Core earnings exclude restructuring and impairment charges and commodity mark-to-market net impact. Reported earnings came in at $1.49 per share, reflecting an increase of 9% year over year. Foreign exchange translation had an adverse impact of 1% on reported EPS.

Pepsico, Inc. Price, Consensus and EPS Surprise

Pepsico, Inc. Price, Consensus and EPS Surprise | Pepsico, Inc. Quote


Total sales improved 1.3% year over year to $16.24 billion. Although foreign exchange (Fx) hurt revenue growth by 1%, pricing had a positive impact of 3%. Reported revenues came in below the Zacks Consensus Estimate of $16.42 billion by 1.1%.

Excluding the impact of Fx, revenues increased 1.7% on an organic basis, primarily driven by higher demand for beverages/food/snacks in the Asia, Middle East and North Africa (AMENA), Europe Sub-Saharan Africa (ESSA) and Latin America segments. Notably, organic sales growth was softer than the 3.1% rise recorded in the previous quarter.

Total volumes declined 1% during the quarter against flat growth in the previous quarter. While organic snacks/food increased 1% (softer than 2% growth witnessed in the second quarter), beverage volumes dropped 1% (versus down 2%).

Quarterly Segment Details

Revenues grew 3% at the Frito-Lay segment, 1% at Quaker Foods (QFNA), 6% at Latin America and 8% at ESSA. However, revenues declined 3% in North America Beverages (NAB) and 4% in AMENA segments.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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