PepsiCo Joins Food Giants With Strong Profit, Weak Sales

But its adjusted earnings topped expectations.

Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research.

Even while trying to shore up its struggling soda business in North America, PepsiCo CEO Indra Nooyi said during a call with analysts Monday that the company has been broadening its portfolio to lessen the reliance on sodas for sales.

The food and beverage company saw sales climb for its Frito-Lay North America division and its North America Beverages unit, two areas where Pepsi has been working on offering customers healthier versions of its legacy products.

For the first quarter, net income attributable to the company declined 24 percent to $931 million from last year’s $1.22 billion.

The company’s performance in the first three months of the year was affected by a $373 million impairment charge related to its interests in the Tingyi-Asahi Beverages Holding group.

Quarterly revenue fell 2.9% to $11.86 billion. In the fourth quarter, PepsiCo doubled down on that marketing spend for a quarterly year-over-year increase of 80 basis points. According to Thomson Reuters, analysts expected PepsiCo to booked earnings per share of $0.81. On an organic basis, revenues grew 3.5 percent for the quarter. PepsiCo said in a statement, adding that just 12 per cent of its revenue now comes from Pepsi colas, and less than 25 per cent from fizzy drinks globally. Its focus on driving greater efficiency throughout its operations also contributed significantly to attractive core gross margin expansion.

The remarks underscore PepsiCo’s recent shift in tone as the world’s biggest soda brands have been pressured by intensifying competition and a bad image for fueling weight gain in markets such as the U.S. Analysts polled by FactSet predict $4.70 per share. The reported effective tax rate of 31.9 percent compares to 23.1 percent in the prior year quarter and was impacted by the non-core impairment charge referred to above, which had no tax benefit.