Shares of PepsiCo (PEP) were trading up following the company’s second-quarter earnings report, out this morning.
The company said it earned $1.49 billion, or 94 cents a share, down from $1.89 billion in the year-ago period. Excluding one-time items, earnings were fell to� $1.12 from $1.21, but still came in ahead of the $1.09 a share consensus. Revenue also decreased 2.2% to $16.46 billion, just shy of analysts’ estimates of $16.5 billion.
Investors seemed mollified with the company’s explanation that the extra money it is pouring into advertising–up 40% in the most recent quarter in the U.S.–will boost its biggest brands, especially as it seeks to shift away from discount-driving sales to greater pricing power: Shares were recently up 2% to $70.15. Pepsi said that it was seeing improving brand equity in many key markets as a result of the marketing.
Like many other multinational corporations, the strong dollar negatively impacted Pepsi’s quarter. Gross margin contracted from 52.7% to 51.9%. However, management said the recent rise in commodity costs, which has burdened other food companies, won’t have a great affect, as Pepsi locks in pricing in advance, and corn accounts for only 10% of its total costs.
No comments:
Post a Comment