PepsiCo Q4 Core EPS Beats Market, Lifts Dividend; Sees Growth In FY23

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Snack and beverage giant PepsiCo Inc. reported Thursday sharply lower profit in its fourth quarter, despite higher revenues. Adjusted earnings and top line beat market estimates. Further, the company lifted its dividend and announced around $1 billion share buyback. Looking ahead for fiscal 2023, PepsiCo expects growth in organic revenues and core earnings, which is below current market estimates.

In pre-market activity on Nasdaq, PepsiCo shares were gaining around 2 percent to trade at $174.

For fiscal 2023, PepsiCo expects to deliver 6 percent organic revenue growth and 8 percent core constant currency earnings per share growth.

Around 2-percentage-point foreign exchange translation headwind is projected to impact reported net revenue and core earnings per share growth based on current market consensus rates.

Based on this, core earnings per share for the year would be $7.20, a 6 percent increase from last year's core earnings per share of $6.79.

On average, 23 analysts polled by Thomson Reuters expect earnings of $7.28 per share for the year. Analysts' estimates typically exclude special items.

Further, the company announced a 10 percent increase in its annualized dividend to $5.06 per share, effective with the dividend expected to be paid in June 2023.

Chairman and CEO Ramon Laguarta said, "Moving forward, we will continue to focus on driving growth and winning in the marketplace while developing advantaged capabilities to fortify our businesses for the long-term. This includes embedding pep+ at the center of our business in how we innovate, operate, run our teams, and build our brands."

In its fourth quarter, net income attributable to the company plunged to $518 million from last year's $1.32 billion. Earnings per share fell 61 percent to $0.37 from $0.95 a year ago.

Core earnings were $2.31 billion or $1.67 per share, compared to $2.13 billion or $1.53 per share last year. Analysts expected earnings of $1.65 per share for the quarter.

Net revenue grew 10.9 percent to $28 billion from prior year's $25.25 billion. Organic revenue growth was 14.6 percent. Analysts expected revenues of $26.84 billion.

In the quarter, Convenient Foods volume fell 2 percent, while Beverages volume was flat.

On a segmental basis, Frito-Lay North America revenues climbed 25 percent year-over-year to $7.71 billion, and Quaker Foods North America revenues grew 16 percent to $1.06 billion.

Revenues in PepsiCo Beverages North America went up 6 percent to $8.11 billion, and the growth was 21 percent in Latin America, 4 percent in Africa, Middle East and South Asia, and 2 percent in Asia Pacific, Australia and New Zealand and China Region.

Meanwhile, Europe revenues fell 2 percent.

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