- PepsiCo's net revenue for the fourth quarter declined 7% to $18.59 billion, the company reported Thursday morning, though that figure still beat analysts' estimates. Net income rose 31%.
- The company's North America Beverages and snack businesses sawrevenue growth in the quarter, both reporting 2% increases, which helped offset currency headwinds. North America Beverages made up 31.5% of total revenue.
- PepsiCo reported $1.06 per share for quarterly earnings, adjusted for one-time gains and costs, which was even with Wall Street predictions.
Revenue growth in PepsiCo's snacks business has typically outperformed beverages in North America, but that beverage segment increased by 4%, driven by its non-soda brands, in the third quarter while snacks saw only a 1% uptick. This quarter, that revenue growth evened out.
After a quiet period for acquisitions, with PepsiCo's last major deal dating back to 2011, the company could be open to M&A once again, judging by its attempts to purchase a stake in Chobani. Chobani recently turned down that offer because PepsiCo sought a majority stake, while Chobani was only looking to sell a minority stake to retain its independence.
PepsiCo may be recharging its M&A efforts, particularly in the non-soda beverage category, which has contributed to the company's revenue growth in the past. Competitor Coca-Cola has recently targeted this category (Monster, Suja). PepsiCo may also pursue acquisitions in snacks, a skyrocketing market, which the company has depended on for strong sales as consumers retreat from soda. The company currently holds a 60% share of the salty snacks market, so strategic acquisitions in this space could strengthen its domination of the category.
PepsiCo's chief competitor Coca-Cola reported an 8% dip to $10 billion and 3% volume overall growth for beverages in both North America and globally. Both companies reported sales volume declines for soda in larger packaging before these earnings reports but a rise in sales of smaller packages like mini-cans and mini-bottles, a packaging trend that is particularly strong in the soda segment.
PepsiCo will be keeping an eye this year on Coca-Cola's "zero" trademark case, which PepsiCo successfully challenged in the Canada and U.K. markets. This time around, Dr Pepper Snapple as taken the charge on trying to keep Coca-Cola from securing the trademark. PepsiCo doesn't currently have a product named "Zero," choosing Pepsi MAX instead, but if Coca-Cola succeeds, that would prevent PepsiCo from using the mark.