PepsiCo beats by $0.07, reports revs in-line; reaffirms FY13 guidance
Reports Q3 (Sep) earnings of $1.24 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $1.17; revenues rose 1.5% year/year to $16.91 bln vs the $16.98 bln consensus.
•Organic revenue increased 3.9% year to date and core constant currency operating profit increased 8% year to date. Reported operating profit increased 6% year to date. •Core gross margin expanded 70 basis points in the quarter reflecting implementation of effective revenue management strategies. •PepsiCo Americas Foods organic revenue grew 7% in the quarter driven by mid-single-digit organic revenue growth at Frito-Lay North America and double-digit organic revenue growth in Latin America Foods. Reported net revenue increased 5% in the quarter driven by mid-single-digit net revenue growth at Frito-Lay North America and high-single-digit net revenue growth at Latin America Foods. •In the U.S., the company's largest market, grew value, volume and unit market share in salty snacks in the quarter. •Despite a challenging North America LRB category, NAB sequentially improved both volume and value market share performance in measured channels while leading the industry in net price realization at retail. •AMEA organic revenue grew 6% in the quarter reflecting organic volume growth in both snacks and beverages, despite political and marketplace volatility in certain markets, notably Egypt and India. Year-to-date, AMEA organic revenue increased 11%. Reported net revenue in AMEA declined 3% in the quarter and 3% year to date, reflecting the impact of structural changes and foreign exchange translation. •Developing and emerging market organic revenue grew 9% in the quarter. On a reported basis, developing and emerging market net revenue grew 4 percent in the quarter reflecting structural changes and unfavorable foreign exchange translation. Consistent with its previous guidance for 2013, the co expects 7% core constant currency EPS growth versus its fiscal 2012 core EPS of $4.10. Based on the current foreign exchange market consensus, the co currently expects that foreign exchange translation will have an unfavorable impact of at least 2%age points on the company's full-year core EPS performance in 2013.
Excluding the impact of structural changes and foreign exchange translation, organic revenue is expected to grow mid-single digits versus 2012, consistent with the company's long-term guidance. The impact of structural changes, principally beverage refranchisings, is expected to reduce net revenue growth by ~1%age point for the full year. Based on the current foreign exchange market consensus, the co currently expects foreign exchange translation to have an unfavorable impact of ~2%age points on the company's full year net revenue growth.
For 2013, the company expects low-single-digit commodity inflation, and productivity savings of ~$900 million. The co expects advertising and marketing expense to increase at or above the rate of net revenue growth. The co expects higher interest expense driven by increased debt balances and a core effective tax rate of ~27%. The co is targeting over $9 billion in cash flow from operating activities and more than $7 billion in management operating cash flow (excluding certain items) in 2013. Net capital spending is expected to be ~$3 billion in 2013, within the company's long-term capital spending target of less than or equal to 5% of net revenue. The co expects to return a total of $6.4 billion to shareholders in 2013 through dividends of ~$3.4 billion and share repurchases of ~ $3.0 billion.
Co reaffirms guidance for FY13, sees EPS of constant FX core EPS +7%, excluding non-recurring items, vs. $4.35 Capital IQ Consensus Estimate.