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PepsiCo beverage sales signal gradual recovery, shares rise


By Aishwarya Venugopal

(Reuters) - Inc's better-than-expected quarterly results on Tuesday pointed to signs of a gradual recovery in its struggling soda as the company doubled down on efforts to promote colas, setting shares up for their best day in seven years.

The company's beverages sales fell 0.9 percent - its smallest drop in four quarters - as the company went "toe-to-toe" with rival Coca-in marketing and pricing and launched a campaign to revive soda sales.

has been trying to popularize the company's trademark colas amid intense competition from Coca-Co and as consumers opt for healthier drinks.

Demand for its zero sugar and diet were "flying off the shelves," Nooyi said in a post earnings call with analysts.

"Every part of our in North American Beverages is showing sequential improvement," Nooyi said. "As we go into the third quarter, we feel good about the trend rate."

PepsiCo's net revenue rose 2.4 percent to $16.09 billion, of which $5.19 billion came from its and beat Wall Street expectations.

"There were some concerns the sales were going to be lackluster and instead we saw some solid improvements," said.

"(PepsiCo) did seem like that they are starting to see some sort of inflection point in the (beverages) results."

Sales at North America, its biggest business, grew for the second straight quarter, rising 4.3 percent on the back of higher sales of its newly launched products and and Marinara.

The company has been ramping up its snacks offering to overcome its sluggish sales by introducing products with new flavors, healthier preparation methods and attractive packaging.

Pepsi's overseas markets also grew with organic revenue rising 7 percent in Europe Sub-Saharan Africa and 6 percent in Asia, &

Net income attributable to the company fell about 14 percent to $1.82 billion, in the second quarter ended June 16, mainly due to higher costs for and raw materials.

To offset these impacts, cut costs across the board and refranchised its operations.

Excluding items, Pepsi earned $1.61 per share, topping analysts' estimate of $1.52 per share, according to I/B/E/S.

Pepsi also played down the impact of tariffs imposed by the on aluminum imports, saying it so far was "immaterial".

Shares of the company were up 3.7 percent at $111.78 in morning trading.

(Reporting by in Bengaluru; Editing by and Arun Koyyur)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, July 10 2018. 21:07 IST