PepsiCo share price down, Q3 profit jumps, boosts full-year outlook

October 10, 2014 6:55 am

PepsiCo reported third-quarter profits increase, overtaking analysts’ forecast and boosting yearly earnings estimates as the company raised prices on their products and trimmed costs.

In a statement dated October 9th the company reported a net income of $2 billion, a 5% increase, compared to $1.91 billion a year earlier, or $1.32 per share to $1.23. That surpassed the expectation of Bloomberg’s analysts whose prediction was for $1.29 per share.

With that in mind, PepsiCo has changed its forecast for yearly earnings from 8% to a 9% increase, also adjusted earning per share expectation to $4.72.

Overall revenue increased by 1.8% up to $17.22 billion in the quarter ended September 6th, which also exceeded analysts’ expectations for $17.08 billion.

“We delivered good third quarter results in the face of an ongoing challenged macroeconomic environment driven by increasing volatility in the emerging markets and continued sluggish consumer demand in developed markets,” said Chairman and CEO Indra Nooyi.

Activist investor Nelson Peltz pressured PepsiCo into dividing its snack and beverage divisions into two separate companies. The CEO and board of directors have rejected the idea.

Hugh Johnston, CFO, commented on the matter in an interview: “We continued to show that the combination of beverages and snack foods works really well together.”

Revenue from the company’s largest unit, Americas Beverages, fell 0.4% to $5.38 billion, while sales from the Frito-Lay North American unit rose by 3% to $3.52 billion. Revenues from Europe fell 1.4% to $3.76 billion, while the Latin America Foods registered sales of $2.18 billion, 6.3% higher. The Asia, Middle East and Africa unit achieved an 11% jump to $1.78 billion.

PepsiCo’s snack division is considered stronger and often relied upon to make up for declines in beverage sales. The company is looking to change that with the release of its new product Pepsi True which will be only sold on Amazon.com.

PepsiCo Inc settled 0.39% lower on Thursday at $93.57 in New York, marking a +17.70% year-change. The company is valued at $140.04 billion. According to the Financial Times, the 21 analysts offering 12-month price targets for PepsiCo Inc have a median target of $100.00, with a high estimate of $108.00 and a low estimate of $81.00. The median estimate represents a 6.45% increase from the last price of $93.94

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