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Feb 11, 2021

PepsiCo's snacks, cereal provide boost to quarterly sales

Major brands sitting out the Super Bowl do not know how to address COVID-19: John Yorke


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PepsiCo Inc. reported stronger-than-expected fourth-quarter revenue as consumers kept their pantries full with the company’s snack and cereal offerings through the extended global lockdown.

Sales rose 8.8 per cent to US$22.46 billion in the quarter, PepsiCo said, topping the US$21.81 billion average estimate from analysts. The maker of Lay’s potato chips and Tropicana juice announced a 5 per cent increase in its annualized dividend.

Key Insights

  • PepsiCo said organic sales rose 5 per cent at its Frito-Lay division, and the company saw an 8 per cent increase at Quaker Foods North America. For 2021, the company forecast a mid-single digit increase in organic revenue and a high-single digit gain in earnings per share excluding currency fluctuations.
  • “We ended the year on a strong note with our global beverage business having accelerated while our global snacks and food business remained resilient in the fourth quarter,” Chief Executive Officer Ramon Laguarta said in a statement.
  • Costs related to the coronavirus pandemic reduced operating profit growth by 2 percentage points at Frito-Lay and Quaker Foods.
  • The company’s North America beverage business, which had struggled amid closed restaurants, stadiums and other public venues, reported 5.5 per cent organic revenue growth in the quarter.
  • PepsiCo said earlier this week that it would rename the racially offensive Aunt Jemima brand of pancake mix and syrup.

Market Reaction

  • PepsiCo shares were little changed in premarket trading. The stock fell 7.1 per cent this year through Wednesday, trailing the 4.1 per cent rise of the S&P 500 Index.