10-QPeriod: Q2 FY2019

PEPSICO INC Quarterly Report for Q2 Ended Jun 15, 2019

Filed July 9, 2019For Securities:PEP

Summary

PepsiCo, Inc. reported solid revenue growth for the first half of fiscal year 2019, with net revenue increasing by 2% to $29.3 billion compared to the same period in 2018. While operating profit saw a slight decrease of 2% to $4.7 billion, this was largely due to higher restructuring charges and an unfavorable comparison to a gain in the prior year. The company successfully managed its costs and benefited from productivity savings, contributing to a 9% increase in net income attributable to PepsiCo to $3.4 billion. Key drivers of performance include strong volume growth across most divisions, particularly in snacks (Frito-Lay North America) and international markets. The acquisition of SodaStream is beginning to contribute positively, especially in the ESSA segment. Despite facing headwinds from unfavorable foreign exchange rates and increased commodity costs, PepsiCo demonstrated resilience through effective net pricing strategies and ongoing productivity initiatives. The company continues to return value to shareholders through dividends and share repurchases, underscoring its commitment to financial discipline and long-term growth.

Financial Highlights

50 data points
Beta

Revenue

$16.45B

55.0% Gross Margin

Net Income

$2.04B

12.4% Net Margin

EPS (Diluted)

$1.44

Total Assets

$75.08B

Cash & Equivalents

$3.47B

Free Cash Flow

$1.73B

Financial Statements
Beta
Revenue$16.45B
Cost of Revenue$7.40B
Gross Profit$9.04B
SG&A Expenses$6.32B
Operating Income$2.73B
Interest Expense$223.00M
Net Income$2.04B
EPS (Basic)$1.45
EPS (Diluted)$1.44
Shares Outstanding (Basic)1.40B
Shares Outstanding (Diluted)1.41B

Key Highlights

  • 1Net revenue increased by 2% to $29.3 billion for the first 24 weeks of 2019, up from $28.7 billion in the prior year.
  • 2Net income attributable to PepsiCo rose by 9% to $3.4 billion for the 24 weeks ended June 15, 2019.
  • 3Diluted earnings per share (EPS) increased by 10% to $2.44 for the 24 weeks ended June 15, 2019.
  • 4The company incurred significant restructuring and impairment charges totaling $184 million for the 24 weeks ended June 15, 2019, impacting operating profit.
  • 5The acquisition of SodaStream is noted as contributing to revenue and volume growth, particularly in the ESSA segment.
  • 6Unfavorable foreign exchange rates negatively impacted net revenue growth by 3% for the 24 weeks ended June 15, 2019.
  • 7Free cash flow for the 24 weeks ended June 15, 2019, was $263 million, an increase from $185 million in the prior year.

Frequently Asked Questions

PepsiCo reported a 2% increase in net revenue for the first 24 weeks of 2019, reaching $29.3 billion, compared to $28.7 billion in the same period of 2018. This growth was driven by a combination of volume increases and effective net pricing across its divisions.

PepsiCo incurred $184 million in restructuring and impairment charges for the 24 weeks ended June 15, 2019, related to its 2019 Productivity Plan. These charges negatively impacted operating profit, contributing to a year-over-year decrease in that metric despite revenue growth.

The acquisition of SodaStream is starting to contribute positively to PepsiCo's results, particularly in the Europe Sub-Saharan Africa (ESSA) segment. It is noted as a driver for both snacks and beverage volume growth, with a notable impact on ESSA's net revenue and operating profit.

PepsiCo remains committed to returning capital to shareholders. For 2019, the company expects to return approximately $8 billion through share repurchases of about $3 billion and dividends of about $5 billion. This includes a 3% increase in the annualized dividend announced in February 2019.