PepsiCo beats by $0.08, misses on revs; reaffirms FY16 guidance
- Reports Q1 (Mar) earnings of $0.89 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus of $0.81; revenues fell 2.9% year/year to $11.86 bln vs the $12 bln Capital IQ Consensus. Organic revenue grew 3.5%. Foreign exchange translation had a 4.5-percentage-point unfavorable impact and the Venezuela deconsolidation had a 2-percentage-point unfavorable impact on reported net revenue.
- Core gross margin expanded 130 basis points and core operating margin increased 165 basis points. Margin expansion reflects the implementation of effective revenue management strategies and previously announced productivity initiatives, partially offset by a 65 basis point increase in advertising and marketing expense as a percentage of sales. Core constant currency operating profit increased 12%.
- Co reaffirms guidance for FY16, sees EPS of $4.66 vs. $4.71 Capital IQ Consensus; ~4% organic revenue growth, excluding the impact of the 53rd week; Based on current foreign exchange market consensus rates, foreign exchange translation to negatively impact reported net revenue growth by 4 percentage points; The 53rd week to contribute ~1 percentage point to reported net revenue growth; Low-single-digit raw material deflation excluding the impact of transaction-related foreign exchange. Including the impact of transaction-related foreign exchange, raw materials are expected to have low-single-digit inflation; The benefit of a 53rd week will be reinvested in certain productivity and growth initiatives; Productivity savings of ~$1 billion.