PepsiCo revenues ease on lower drink sales

PepsiCo reported a slide in quarterly earnings on Monday, after the Covid-19 pandemic hurt drink sales at the US food and beverage giant.

Net revenues in the 12 weeks to 13 June came in at $15.95bn, a 3.1% fall year-on-year, while earnings per share slid to $1.18 from $2.14 a year previously.

However, the fall in revenues was not as big as some analysts had feared, while core group earnings – which strip out one-off items – were also above expectations, at $1.32 a share.

PepsiCo Beverages North America saw revenues slide 7% and earnings tumble 42%, as stay-at-home measures closed restaurants and other leisure facilities. All international regions also reported a fall in revenues, with only Asia Pacific seeing an increase in earnings.

But the lockdown created a surge in demand for PepsiCo-owned snack foods such as Cheetos and Fritos, and the Frito-Lay North America and Quaker Foods North America divisions both reported improved revenues and earnings.

Ramon Laguarta, chairman and chief executive, said: “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 resilience in our global snacks and foods business.”

The easing of lockdown restrictions means PepsiCo is now seeing an improvement in both its business performance and channel mix, Laguarta added.

But he cautioned: “However, the environment has remained volatile and much uncertainty remains about the duration and the long-term implications of the pandemic. As a result we are providing a financial outlook for the fiscal year 2020 at this year.”

The forecast-beating numbers helped support the stock in pre-market trading, and by 1215 BST PepsiCo was ahead nearly 2%.