PepsiCo beats by $0.04, reports revs in-line; guides FY17 EPS and rev below consensus; raises dividend 7%, effective in June
- Reports Q4 (Dec) earnings of $1.20 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $1.16; revenues rose 5.0% year/year to $19.52 bln vs the $19.58 bln Capital IQ Consensus. Foreign exchange translation had a 2 percentage point unfavorable impact on reported net revenue and the 53rd reporting week had a 3.5 percentage point favorable impact. Organic revenue grew 3.7%.
- Core gross margin contracted 25 basis points and core operating margin expanded 90 basis points. Reported and core operating margin expansion reflect the implementation of effective revenue management strategies and productivity gains. Reported operating profit increased 6 percent and core constant currency operating profit increased 15 percent.
- Co issues downside guidance for FY17, sees EPS of $5.09, excluding non-recurring items, vs. $5.16 Capital IQ Consensus Estimate.
- The Company expects 2017 organic revenue growth of at least 3 percent. Based on current market consensus rates, foreign exchange translation is expected to negatively impact reported net revenue growth by ~3 percentage points and the 53rd week in 2016 is expected to negatively impact reported net revenue growth by 1 percentage point. This implies rev down 1% as reported vs. consensus +2.6% to $64.5 bln.
- The Company also announced a 7 percent increase in its annualized dividend to $3.22 per share from $3.01 per share, effective with the dividend expected to be paid in June 2017. Total dividends to shareholders are expected to be approximately $4.5 billion in 2017. In addition, the Company anticipates share repurchases of approximately $2 billion, resulting in expected total cash returned to shareholders of approximately $6.5 billion in 2017.