Exceeding expectations
PepsiCo, Inc. (NYSE:PEP)’s first-quarter 2013 organic net revenues grew 4.4%, balanced between volume and pricing growth. The beverage and snack-food giant’s better-than-expected reported earnings came in at $0.69 per share. Shares were up roughly 6% in the few days following the announcement. PepsiCo stock currently trades close to its all-time high.
Sales growth
PepsiCo, Inc. (NYSE:PEP) and rival The Coca-Cola Company (NYSE:KO) are both boldly pushing growth in emerging markets, with both gunning to gain market share for their namesake colas. In PepsiCo’s important AMEA (Asia, Middle East, and Africa) operating segment, first-quarter organic revenue grew 15%, led by growth in both snacks and beverages. However, reported net revenue was down 14%, mostly due to refranchising of bottling operations in China. Within this segment, Turkey performed well, with 8% organic revenue growth.
Strong growth also came from Pepsi’s Latin America Foods segment, where organic revenue grew 14% in the quarter, mostly due to pricing increases. Operating profit increased 25%, resulting from revenue growth and productivity gains. Within this geographic segment, organic revenue grew 12% in Brazil.
PepsiCo, Inc. (NYSE:PEP) also posted solid growth in a number of developed markets. PepsiCo’s Frito-Lay North America segment saw organic revenues grow a savory 4% in the quarter. And amid recent declines in domestic soda sales, PepsiCo served up growth in beverages, with its closely watched American beverage segment posting a 4% gain in operating profit. Operating margins also expanded, thanks in part to productivity gains. With competition bubbling up between the big cola rivals, PepsiCo, Inc. (NYSE:PEP) continues to focus on heightened marketing, aggressive advertising, and strong pricing for its traditional cola brands.
Chew on this
Four times larger than closest rival Kraft Foods Group Inc (NASDAQ:KRFT) , PepsiCo holds its true horsepower in its status as a leading snack-food maker. PepsiCo has successfully grown market share in both emerging and developed markets for its Quaker and Lay’s brands during the past several years. In order to drive sales in developed markets, the company is focusing on healthier snacks. Meanwhile, in developing markets like China and India, PepsiCo, Inc. (NYSE:PEP) is launching new products to help it grow market share.
Foolish takeaway
Until recently, PepsiCo’s stock price hadn’t realized much reward from the company’s restructuring efforts. However, with the company on track to deliver a targeted $3 billion in productivity savings by 2015 and the stock trading near all-time highs, it looks like its hard work is starting to pay off.
The article 3 Things You Need to Know About PepsiCo’s Earnings Release originally appeared on Fool.com and is written by Nicole Seghetti.
Fool contributor Nicole Seghetti owns shares of PepsiCo. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo.
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