Dive Brief:
- PepsiCo reported a 1.9% decrease in revenue to $16.03 billion for the third quarter in the company's earnings report released Thursday. Revenue without currency effects increased 4.2%.
- PepsiCo's Frito-Lay and beverage divisions in North America buoyed the company's quarterly revenue and offset the strong dollar's negative impact on international sales.
- After reporting a 282% leap in profits year over year, PepsiCo raised its profit forecast to $4.78 per share for the year, compared to its previous estimate of $4.71. The profit gains were high due to last year's $1.36 billion impairment charge on the company's Venezuela operations.
Dive Insight:
PepsiCo chairman and CEO Indra Nooyi credited last quarter's performance to the company's "product portfolio, geographic mix and capability centers," which enable PepsiCo "to deliver balanced revenue and productivity," Nooyi said in a statement. PepsiCo has reaped the benefits of cost-cutting measures while also investing in innovation in both snacks and beverages, which resulted in the company's positive organic growth in its latest quarter.
However, this was PepsiCo's eighth straight quarter of revenue declines, a sign of the challenges multinational companies face due to the strength of the dollar and currency fluctuations worldwide. But back home in North America, the company's revenue and profits suggested the innovations and marketing efforts are resonating domestically.
Quaker remains another challenge for PepsiCo, as the segment's revenue and volume both fell 2% and its operating profit fell 5%. Last quarter, the Quaker segment posted a revenue increase, which followed a 3% decline in net revenue in the previous quarter. The Quaker brand debuted gluten-free varieties at the start of the year to align with consumers' increased demands for gluten-free foods.
Organic revenue is growing as the company experiments with innovation across its portfolio. Most recently, that has included announcing the upcoming launch of a new line of probiotics-enhanced juices for Tropicana, which aligns the brand with a fast-rising consumer health trend.