PepsiCo results beat on boost from North American snacks, beverages units

(Reuters) – PepsiCo Inc reported first-quarter sales and profit above analysts’ estimates on Wednesday, boosted by higher demand for its snacks, sparkling water and low-sugar sodas, sending its shares up about 2 percent before the bell.

Beverage and packaged food companies have been under pressure from changing consumer preferences and Pepsi has responded by coming up with new recipes and using better ingredients for its snacks and sodas.

PepsiCo has also bolstered its product portfolio to attract customers by acquiring companies such as Bare chips and launching Pepsi Zero Sugar, bubbly sparkling water and Pure Leaf iced teas.

These moves helped the company post a 2.15 percent growth in sales in its North America beverages unit, while sales in its Frito-Lay snacks division rose 5.5 percent.

Organic sales, a key metric that shows the health of Pepsi’s legacy brands and strips out impacts from currency fluctuations and acquisitions, rose 5.2 percent, its highest quarterly growth rate in more than three years, the company said

Under Chief Executive Officer Ramon Laguarta, who took over the top job less than six months ago, the company has laid out plans to spend more on advertising, boost its manufacturing capacities, improve its supply chain and focus more on healthy snacks and beverages.

During the quarter, Pepsi launched new fruity flavors of bubbly sparkling water, Pure Leaf Hibiscus Herbal teas and Gatorade Zero in Glacier Freeze and Berry flavors.

“We are equally pleased with the progress we are making on our ambitious agenda to invest to build capabilities, strengthen our brands, and add capacity to grow,” Laguarta said in a statement.

It reiterated its 2019 organic revenue growth of 4 percent and said it continued to expect a fall in core constant currency earnings of about a percent.

Net income attributable to the company rose 5.2 percent to $1.41 billion. Excluding one-time items, the company earned 97 cents per share.

Net revenue rose 2.6 percent to $12.88 billion. Analysts were expecting profit of 92 cents per share and revenue of $12.70 billion, according to IBES data from Refinitiv.

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