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PepsiCo (NASDAQ:PEP) traded lower in early action on Thursday after posting a mixed Q2 earnings report.
The beverage giant reported organic sales were up 1.9% during the quarter, vs. +3.0% consensus. Total revenue was up 0.8% year-over-year during the quarter to $22.5 billion, vs. $22.5 billion consensus. Volume was down 2% during the quarter for the convenient foods part of the business, and was flat in the beverages business. The biggest drop by segment was the 17% slide for Quaker Foods North America. Organic sales were up 5% for the European business.
Operating profit was up 11% on a constant-currency basis during the quarter, led by a 30% gain for the Europe segment and a 37% improvement for the PepsiCo Beverages North America segment. EPS came in at $2.28 vs. $2.16 consensus.
CEO update: “During the second quarter, our business delivered net revenue growth, strong gross and operating margin expansion and double-digit EPS growth, remaining agile despite facing difficult net revenue growth comparisons versus the prior year, subdued category performance within North America convenient foods and the impacts associated with certain product recalls at Quaker Foods North America.”
In terms of guidance, PepsiCo (PEP) expects approximately 4% organic revenue growth. In addition, the company continues to expect at least an 8% increase in core constant currency EPS and a core annual effective tax rate of 20%. Total cash returns to shareholders of approximately $8.2 billion is anticipated, comprised of dividends of $7.2 billion and share repurchases of $1.0 billion. PepsiCo (PEP) also warned of an approximate one percentage point foreign exchange translation headwind to impact reported net revenue and core EPS growth based on current market consensus rates. Full-year EPS of at least $8.15 is anticipated, vs. $8.16 consensus. For the balance of the year, PepsiCo (PEP) plans to further elevate and accelerate its productivity initiatives and make disciplined commercial investments in the marketplace to stimulate growth.
Shares of PepsiCo (PEP) fell 2.40% in premarket trading on Thursday. Rival Coca-Cola (KO) shed 0.19% in the early session, and Keurig Dr Pepper (KDP) was down 0.49%.