112.03, +4.27, +3.96%) has climbed after beating earnings expectations for the second
The beverage company reported above-consensus second quarter earnings of $1.61 per share on a 2.4% year/year increase in revenue to $16.09 bln, which was just ahead of market expectations.
Organic revenue grew 2.6% year/year, slightly ahead of the year-to-date growth rate of 2.5%.
The company's revenue growth rate was fueled by growth in international markets.
Europe Sub-Saharan Africa revenue increased 11.0% while organic revenue grew 7.0%. Organic volume grew 3.5% in the Food/Snacks segment while increasing 8.0% in the Beverages unit. Operating profit declined 11.0% due to a sale made during the prior year. Higher commodity costs lowered the operating profit growth rate by three percentage points.
Latin America revenue grew 1.0% while organic revenue increased 3.5%. Organic volume declined 3.0% in both Food/Snacks and Beverages. Operating profit grew 18.0% due to planned cost reductions and effective net pricing. Insurance settlement recoveries related to the 2017 earthquake in Mexico boosted the operating profit growth rate by five percentage points while promotional spending accrual adjustment added another four percentage points. Lower restructuring and impairment charges boosted the operating profit growth rate by 11 percentage points.
Asia, Middle East and, North Africa revenue decreased 2.0% while organic revenue grew 6.0%. Organic volume in Food/Snacks increased 4.0% while Beverages volume grew 0.5%. Operating profit jumped 61.0% due to refranchising of the beverage business in Thailand and Jordan. The refranchising added 42 percentage points to the growth rate. Effective net pricing, planned cost reductions, and volume growth also contributed to operating profit growth.
North America Beverages revenue fell 1.0% while organic volume declined 2.0%. Operating profit fell 16.0% due to higher transportation costs and higher commodity costs.
Frito Lay North America revenue grew 4.0% while organic volume increased 2.0%. Operating profit increased 5.0% due to higher net revenue and planned cost reductions.
Quaker Foods North America revenue fell 5.0% while organic volume declined 3.0%. Operating profit was unchanged.
Looking ahead, the company expects that earnings for the fiscal year will hit $5.70 per share, which is ahead of market expectations. The organic revenue growth rate is expected to be in-line with the 2017 growth rate of 2.3% or better.
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