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PepsiCo Q4 Results Beat View; Hikes Dividend, Announces $15 Bln Share Buyback

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Snack and beverage giant PepsiCo Inc. (PEP) on Tuesday reported a net loss for the fourth quarter, reflecting revenues that were flat with last year and a net tax expense related to the U.S. tax reform.

However, both revenue and adjusted earnings per share for the quarter beat analysts' estimates. In addition, the company raised its annualized dividend by 15 percent and announced a new share repurchase program of up to $15 billion.

For the fourth quarter, net loss attributable to the company was $710 million or $0.50 per share, compared to net income of $1.40 billion or $0.97 per share in the year-ago period.

The latest quarter's results included a provisional net tax expense of $2.5 billion or $1.73 per share as a result of the U.S. Tax Cuts and Jobs Act. It also includes restructuring charges of $226 million.

Core earnings for the quarter were $1.31 per share, compared to $1.20 per share in the year-ago quarter. On average, analysts polled by Thomson Reuters expected the company to earn $1.30 per share for the quarter.

Revenue for the quarter edged up to $19.53 billion from $19.52 billion last year. Analysts expected revenues of $19.39 billion. Organic revenue growth for the quarter was 2.3 percent.

In the quarter, Frito-Lay North America, Quaker Foods North America and North America Beverages reported lower revenues, while Asia, Middle East and North Africa reported flat revenues. These were partly offset by higher revenues in Europe, Sub-Saharan Africa and Latin America.

For fiscal 2018, PepsiCo expects core earnings per share of $5.70, representing a 9 percent increase compared to 2017 core earnings per share of $5.23. The Street expects earnings of $5.67 per share for the year.

The company also expects full-year organic revenue growth to be at least in line with the 2017 growth rate.

In addition, PepsiCo announced a 15 percent increase in its annualized dividend per share to $3.71 per share from $3.22 per share, beginning with the June 2018 payment.
The company expects total dividends to shareholders to be approximately $5 billion and share repurchases to be about $2 billion.

PepsiCo also announced a new share repurchase program providing for the repurchase of up to $15 billion of its common stock commencing on July 1, 2018 and expiring on June 30, 2021. This will replace the $12 billion repurchase program which commenced on July 1, 2015 and expires on June 30, 2018.

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