PepsiCo reports strong first quarter as revenue grows 10% to US$13.88bn

USA – PepsiCo has released its first quarter 2020 financial report, posting stronger than expected results and registering a 7.9% organic revenue growth.

The food and beverage company posted a net revenue of US$13.88 billion up from US$12.88 billion released in a similar period last year while gross profit rose to US$7.754 billion up from US$7.196 billion posted in Q1 2019.

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Frito-Lay North America saw its net revenue rise to US$4.074 billion up from US$3.815 billion while PepsiCo Beverages North America reported a 3.3% growth in net revenue to US$4.838 billion. Quaker Foods North America also registered a 6.3% growth.

Net revenues for its operations in Latin America rose 6.9% to 1.31 billion, 2.2% in Europe to US$1.839 billion, 8.9% to US$631 billion in Africa, Middle East and South Asia and Asia Pacific and 5.7% to US$555 billion in Australia and New Zealand and China Region.

Despite posting a strong first quarter, the company said there is still a great deal of uncertainty that exists in relation to COVID-19, including how geographies, retail channels and consumer behaviors will evolve over time.

“Due to this uncertainty, the Company’s previous financial outlook regarding fiscal year 2020 is no longer applicable,” said PepsiCo Chairman and CEO, Ramon Laguarta.

“However, with a strong balance sheet, highly cash generative business and ample liquidity, we believe we have adequate flexibility to meet the needs of our business and return cash to shareholders,” Laguarta added.

“With a strong portfolio of brands in attractive categories, an agile supply chain and flexible go-to- market systems, we are successfully managing through the complexities of today and building competitive advantages to emerge an even stronger company in the future.”

Despite the uncertainty, the company is still expecting to repurchase US$2 billion in shares and spend US$5.5 billion on dividends in fiscal 2020, even as many other publicly traded companies suspend their buyback programs and slash their dividends to preserve cash. 

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The company has also announced that it has closed its strategic acquisition of Rockstar Energy Beverages, one of the popular energy drink maker, for US$3.85 billion in a move to expand its presence in the fast growing energy drink category.

The company further signed a distribution agreement with Vital Pharmaceuticals Inc, the manufacturer of Bang Energy drinks, in which PepisCo will be the exclusive distributor of Bang Energy drinks in the United States.

Together, the beverage giant expects these brands coupled with Mountain Dew, to position PepsiCo to better participate and capture its fair share within an attractive and highly profitable category.

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