PepsiCo profit plunges as tax boost fades
The food and beverage maker's profit tumbled 74%
PepsiCo reported better-than-expected fourth-quarter results driven by its Frito-Lay unit and North American beverage business.
Shares rose as core earnings of $1.45 a share topped the $1.44 average estimate from analysts for the three months through December. Net income, which includes accounting adjustments and restructuring costs, fell 74 percent from a year earlier to $1.77 billion, or $1.26 a share, as the impact of a tax boost dissipated.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PEP | PEPSICO INC. | 176.68 | -0.73 | -0.41% |
| KO | THE COCA-COLA CO. | 61.74 | +0.19 | +0.31% |
“We are pleased with our performance for 2019 as we met or exceeded each of the financial goals we outlined at the beginning of the year,” CEO Ramon Laguarta said in a statement.
Revenue in the last three months of the year rose 5.7 percent to $20.64 billion at the Purchase, New York-based company, topping projections.
Profit in Pepsi's North American beverage unit rose 5 percent to $460 million, as higher sales and productivity helped make up for increasing raw-material and marketing costs. Revenue climbed 4.1 percent to $6.23 billion.
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At the Frito-Lay North America division, earnings rose 3.1 percent to $1.56 billion amid revenue growth and productivity savings, which were partially eroded by rising operating and marketing costs. Revenue at the unit grew 2.9 percent to $5.15 billion.
For the full year, PepsiCo earned $7.3 billion as revenue rose 3.9 percent from a year ago to $67.2 billion.
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Looking ahead, PepsiCo sees 2020 earnings per share rising 6 percent to $5.88 when taking into account currency-exchange costs. The company expects organic revenue growth of 4 percent.
PepsiCo raised its annual dividend 7 percent to $4.09 a share, up from $3.82, and said it would buy back $2 billion worth of stock in 2020.
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PepsiCo shares were up 6.9 percent year-to-date through Wednesday, outperforming the S&P 500's 4.6 percent gain.