PepsiCo Tops Estimates on Lower Profit

It says restructuring charges and a stronger dollar hit earnings

   

PepsiCo Tops Estimates on Lower Profit

dependable dividend stocks 200x195 PepsiCo Tops Estimates on Lower ProfitPepsiCo (NYSE:PEP) said on Wednesday that it earned $1.48 billion during the second quarter, down 21% from $1.89 billion during the same period in 2011.

The soft drink and snack food giant also saw its revenues slide 1.8% to $16.5 billion, compared to $16.8 billion last year.

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Adjusted EPS for the quarter was $1.12, which topped the $1.09 that Wall Street had expected, the Associated Press noted.

Earnings for the second quarter were reduced by $77 million in charges relating to the company’s cost-cutting effort, which has trimmed its payroll by 3% so far. Another $312 million in restructuring charges are anticipated for the remainder of this year.

The company attributed its revenue decline to the re-franchising of its Mexican and Chinese operations, which shifted revenue recognition to local distributors instead of Pepsi.

Increased commodity and marketing costs lowered operating profits by 15%, according to company officials. Sales volume in North America slipped 1%.

Pepsi also noted that a strengthening U.S. dollar has negatively affected earnings.

The company recently announced plans to invest $2.5 billion in China over the next several years to develop new products suited to Chinese tastes. Pepsi is betting on expansion in China to offset market share losses in the U.S. to its traditional rival Coca-Cola (NYSE:KO).

Shares of PepsiCo edged up about 1% in early Wednesday trading.


Article printed from InvestorPlace Media, http://investorplace.com/2012/07/pepsico-tops-estimates-on-lower-profit/.

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