Food & Beverage

Pepsi says revenue jumped 8.8%, sees 2021 results meeting long-term targets

Key Points
  • PepsiCo topped Wall Street's estimates for its fourth-quarter earnings and revenue.
  • The company is anticipating mid-single-digit growth in organic revenue in 2021 and high-single-digit growth in core earnings per share.
  • Pepsi benefited from the continuation of pandemic snacking trends, as well as strong sales of its drinks.
PepsiCo CFO on what the company has learned by navigating the pandemic
PepsiCo CFO on what the company has learned by navigating the pandemic

PepsiCo on Thursday reported fourth-quarter earnings that topped estimates, fueled by pandemic snacking and higher sales of drinks like Gatorade Zero and Bubly sparkling water.

On the heels of the strong quarter, the beverage and snacks maker said it expects its 2021 results to meet long-term financial targets.

Shares of the company fell less than 1% in morning trading. Pepsi's stock has fallen 6% over the last year, giving it a market value of $189 billion.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.47, adjusted vs. $1.46 expected
  • Revenue: $22.46 billion vs. $21.78 billion

The company reported fiscal fourth-quarter net income of $1.85 billion, or $1.33 per share, up from $1.77 billion, or $1.26 per share, a year earlier.

Excluding items, Pepsi earned $1.47 per share, beating the $1.46 per share expected by analysts surveyed by Refinitiv.

Net sales rose 8.8% to $22.46 billion, topping expectations of $21.78 billion. The company's organic revenue, which strips out the impact of foreign currency, acquisitions and divestitures, grew by 5.7%.

Frito-Lay North America saw its organic revenue grow 5% during the quarter. Tostitos and Cheetos were among the brands that consumers reached for when shopping for at-home snacks. However, the segment's operating profit fell due to higher restructuring charges and increases in some operating costs.

Quaker Foods' organic revenue increased by 8%. As many consumers still work from home, they've turned to buying maple syrup and pancake mix for breakfast. On Tuesday, Pepsi renamed its Aunt Jemima brand to Pearl Milling Company after saying in June that the character was based on a racial stereotype.

Its North American beverage unit saw its organic sales rise 5.5%. Pepsi typically receives less of its sales from away-from-home occasions than rival Coca-Cola does, so the segment's organic revenue turned positive in the third quarter. Gatorade Zero, Bubly and its Starbucks-branded coffee drinks helped drive sales.

For 2021, Pepsi is anticipating mid-single-digit growth in organic revenue and high-single-digit growth in core earnings per share, which assumes constant foreign currency exchange rates. The company is also hiking its dividend by 5%, starting in June.

"For 2021, we are planning for our organic revenue and core constant currency EPS growth to be consistent with our long-term objectives," CEO Ramon Laguarta said in a statement.

CFO Hugh Johnston said in an interview that the pandemic's impact on Pepsi's business has become predictable enough for the company to issue an outlook. He added that the company has "mastered operating in what is a very new normal for us."

The company recently announced a partnership with Beyond Meat to create and sell plant-based snacks and drinks. Executives on the conference call said that it will be a small business for Pepsi in 2021, but it plans to enter the market this year.

Read the full report here.