Pepsico reports 1% profit rise in Q2 2016 amid currency headwinds
PepsiCo, the soft drink giant behind such brands as Pepsi, 7-Up, Mountain Dew, among others said on Thursday that revenue for the second quarter of 2016 declined 3.3% to $15.4bn, from $15.92 billion, weighed down by a stronger dollar, the de-consolidation of its Venezuelan operations and currency-driven headwinds in Latin America (32%), Europe and Sub-Saharan Africa (4%). PepsiCo said that its Asia, Middle East and North America (AMENA) division saw a 3% rise in revenue.
However, the company said it was pleased with the overall results and have revised its earnings forecast upwards from 8% to 9% for the rest of the year. It said its North American region helped lift profits. PepsiCo’s Frito-Lay, Quaker Foods and beverage units reported operating profit increases of 8%, 11% and 6% respectively. The company posted a $2.01bn profit for the quarter, rising from $1.98bn in 2015.
“In what continues to be an incredibly volatile global macro environment, we are pleased with our results for the second quarter,” PepsiCo CEO Indra Nooyi said in a statement. “At the same time, our focus on driving greater efficiency throughout our operations contributed significantly to attractive margin expansion while we continued to invest in our business.”
“What’s really working for us more than anything is all of the innovation that we’re doing,” combined with the productivity measures the company has taken, Chief Financial Officer Hugh Johnston said in an interview.
The company’s beverage division said that it would bring back an aspartame-flavored version of Diet Pepsi after briefly removing the controversial artificial sweetener in 2015. Many Diet Pepsi drinkers were not happy with the new taste, so the company will re-introduce it, but the version sweetened with sucralose and Ace-K that replaced the aspartame kind in summer 2015 will remain as Pepsi’s primary calorie-free cola.