Dive Brief:
- PepsiCo posted first quarter earnings of $1.32 billion compared to $931 million in the year-ago period, according to a company release. Total revenue jumped 2% from Q1 2016 to $12.04 billion, exceeding analyst expectations of $11.98 billion, and core EPS came in at $0.94.
- The beverage and snack giant saw volume declines in all of its segments aside from its Asia, Middle East and North Africa division. Pepsi's premiere businesses, Frito Lay North America and North American Beverages, rose 4% and 3% respectively.
- Analysts credit the robust quarter with Pepsi's strong snacks performance and continued cost-cutting efforts. In the company release, Pepsi Chairman and CEO Indra Nooyi said that these Q1 results keep the company on track to achieve its financial objectives for 2017.
Dive Insight:
Pepsi's strong Q1 performance follows equally healthy Q4 earnings, highlighting the long-term success of the beverage maker's cost-cutting initiatives and Nooyi's efforts to introduce new healthier products to the company's portfolio.
This emphasis on what Pepsi calls "guilt-free" food and beverages, like sparkling waters and reduced-fat snacks, have helped buoy the company above a struggling soda industry — though its North American beverage segment still posted a 1% drop in volume. Still, the company's overall earnings outperformed rival Coke, which reported a 11% dip in revenue year over year and announced that it would cut 1,200 jobs as part of a new $800 million cost savings plan.
These hefty earnings are surely welcome news for Pepsi, which has been weathering consumer and industry backlash since its release of a controversial commercial that many felt appropriated the Black Lives Matter protest movement. Pepsi quickly pulled the TV spot, which was developed by its in-house Creators League studio, but a recent survey found that 44% of respondents had a more positive view of Pepsi after watching it.
The company certainly hasn't suffered any financial setbacks as a result of the commercial's bad press, given its Q1 results. Still, analysts are eager to see how the company handles its marketing campaigns moving forward, and if it will avoid political messaging — a tactic becoming more and more popular in the food space — in the future.