10-QPeriod: Q1 FY2021

PEPSICO INC Quarterly Report for Q1 Ended Mar 20, 2021

Filed April 15, 2021For Securities:PEP

Summary

PepsiCo, Inc. reported strong financial results for the twelve weeks ended March 20, 2021, demonstrating significant growth and improved profitability. Net revenue increased by 7% year-over-year to $14.82 billion, driven by a combination of effective net pricing and organic volume growth, although overall unit volume saw a slight decline. Operating profit saw a substantial 20% increase to $2.31 billion, with operating profit margin expanding by 1.7 percentage points to 15.6%. This improvement was bolstered by effective net pricing, productivity savings, and favorable mark-to-market adjustments on commodity derivatives, as well as a notable gain from a short-term investment. Diluted earnings per share (EPS) grew by 29% to $1.24, reflecting the strong operational performance and effective cost management. The company also continued its commitment to returning capital to shareholders, with significant dividend payments and ongoing share repurchase programs.

Financial Highlights

51 data points
Beta

Revenue

$14.82B

55.0% Gross Margin

Net Income

$1.71B

11.6% Net Margin

EPS (Diluted)

$1.24

Total Assets

$91.22B

Cash & Equivalents

$5.66B

Free Cash Flow

-$719.00M

Financial Statements
Beta
Revenue$14.82B
Cost of Revenue$6.67B
Gross Profit$8.15B
SG&A Expenses$5.84B
Operating Income$2.31B
Interest Expense$258.00M
Net Income$1.71B
EPS (Basic)$1.24
EPS (Diluted)$1.24
Shares Outstanding (Basic)1.38B
Shares Outstanding (Diluted)1.39B

Key Highlights

  • 1Net revenue grew 7% to $14.82 billion, driven by effective net pricing and volume growth.
  • 2Operating profit increased by 20% to $2.31 billion, with margins expanding by 1.7 percentage points.
  • 3Diluted EPS rose 29% to $1.24, indicating robust profitability.
  • 4The company made strategic acquisitions in AMESA (Pioneer Foods) and APAC (Be & Cheery), significantly contributing to revenue growth in those segments.
  • 5Favorable mark-to-market gains on commodity derivatives and a gain on a short-term investment positively impacted operating profit.
  • 6Significant cash dividends were paid, totaling $1.4 billion, and share repurchases continued.
  • 7Operating profit in PepsiCo Beverages North America (PBNA) saw a substantial 23% increase due to pricing, cost savings, and favorable COVID-19 related charge adjustments.

Frequently Asked Questions

PepsiCo's revenue growth was primarily driven by effective net pricing and a slight increase in organic volume. Acquisitions also played a significant role in revenue growth for specific segments like AMESA and APAC.

PepsiCo benefited from productivity savings and favorable adjustments related to COVID-19 expenses compared to the prior year. However, operating costs were partially offset by increases in certain operating expenses, higher commodity costs, and, in some segments, a decrease in organic volume.

PepsiCo demonstrated its commitment to returning capital through substantial dividend payments and share repurchases. The company announced a 5% increase in its annualized dividend and expects to return approximately $5.9 billion to shareholders in 2021 through dividends and share repurchases.

Recent acquisitions, such as Pioneer Food Group Ltd. in AMESA and Hangzhou Haomusi Food Co., Ltd. (Be & Cheery) in APAC, significantly contributed to the revenue growth in their respective segments. For example, AMESA's net revenue increased by 40% due to the Pioneer Foods acquisition, and APAC's net revenue grew by 70% with the Be & Cheery acquisition contributing 44 percentage points.