) first quarter 2012 earnings per share (
) declined 7% to 69 cents per share from 74 cents reported in
the previous year quarter. However, EPS edged past the Zacks
Consensus Estimate of 67 cents. The better-than-expected earnings
was driven by positive pricing and packaging initiatives that drove
higher sales in the quarter.
Top Line and Margin Details
Total sales in the quarter increased 4% to $12.4 billion from
$11.9 billion in the prior-year quarter, on the back of
double-digit growth in the Europe and AMEA divisions, and
mid-single-digit growth in PepsiCo Americas Foods. Revenues were in
line with Zacks Consensus Estimate. Constant currency, net
revenue reported year-over-year growth of 5% in the quarter.
The company reported growth in volume, fueled by improving sales
of its brands through increased advertising and marketing,
innovation and undertaking an aggressive productivity program.
Core operating profit in the quarter declined to $1.7 billion
compared with $1.8 billion reported a year ago. The decline was due
to higher unallocated corporate expense as well as increased
marketing spending during the quarter. Interest expense went up by
$12 million owing to bad debts.
PepsiCo Americas Foods (
: Revenue went up 4% year over year in the Frito Lay North America
division, fueled by strong performance in the C-store, Dollar and
Foodservice channels. Latin America Foods reported net revenue
growth of 11%, while the Quaker Foods North American division
revenue declined 3%.
Operating profit for PAF went up to $1.16 billion in the quarter
compared with $1.15 billion reported a year ago.
PepsiCo Americas Beverages (PAB):
Net revenue slipped 2% year over year due to the impact of the
refranchising of the division's beverage business in
Mexico. Pro-forma revenue went up 2% from the previous
Operating profit declined to $533 million in the quarter from
$588 million in the previous year due to high inflation faced by
: Net revenue in the segment went up 13% year over year on the back
of benefits from the Wimm-Bill-Dann (WBD) acquisition.
Operating profit went up in the region to $82 million from $80
million reported a year ago due to net revenue gains and favorable
effective net pricing.
, Middle East & Africa (AMEA):
Net revenue went up 12% year over year on the back of positive
pricing and volume growth.
Operating profit grew to $157 million from $146 million reported
a year ago due to positive pricing, but was partially offset by
higher commodity costs.
Other Financial Updates
PepsiCo exited the quarter with cash and cash equivalents of
$3,485 million, compared with $4,067 million in the previous
quarter. Long-term debt amounted to $22,054 million compared with
$20,568 million in the previous quarter.
Net cash used in operating activities amounted to $690 million,
compared with cash generation of $380 million in the previous
Based on the first quarter 2012 results, PepsiCo projects core
constant currency EPS to decline in fiscal 2012 by approximately 5%
from its fiscal 2011 core EPS of $4.40. The Zacks Consensus
Estimate for fiscal 2012 stands at $4.09 per share.
Currently, we prefer to be Neutral on Pepsi. It holds a Zacks #3
Rank, which translates into a short-term Hold rating.
PEPSICO INC (
): Free Stock Analysis Report
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