PepsiCo’s 2Q15 Revenue Beats Estimates Despite Currency Headwinds

PepsiCo Reports 2Q15 Results: Beats Wall Street Expectations

(Continued from Prior Part)

Revenue exceeds estimates

PepsiCo (PEP) reported revenue of $15.9 billion in 2Q15, which ended June 13, 2015. It exceeded analysts’ expectations of $15.8 billion. However, a strong dollar continues to drag down the company’s international revenue. The second quarter was the third straight quarter that PepsiCo’s revenue fell.

Currency fluctuations still a hurdle

PepsiCo’s 2Q15 revenue fell 5.8% from the comparable quarter of the previous year due to a 10 percentage points impact of currency headwinds. Developing and emerging market net revenue fell 13% due to a weakness in foreign currencies, mainly the Russian ruble, the Venezuelan bolivar, the euro, and the Mexican peso.

PepsiCo and Coca-Cola (KO) have a presence in more than 200 countries. In fiscal 2014, international revenue accounted for 49% and 57% of net revenue, respectively. Dr Pepper Snapple (DPS) derived 12.4% of its fiscal 2014 revenue from outside the United States. Keurig Green Mountain’s (GMCR) international operations accounted for 13.4% of its fiscal 2014 net sales.

These companies expect a strong dollar to continue to impact their revenue in fiscal 2015. PepsiCo, Dr Pepper Snapple, and Coca-Cola together account for more than 2.9% of the iShares Russell 1000 Growth ETF (IWF) and 1.7% of the iShares Core S&P 500 (IVV).

Revenue growth drivers in 2Q15

PepsiCo’s Frito-Lay North America and PepsiCo Americas Beverages segments performed well in the second quarter of 2015. PepsiCo has been increasing the prices of its food and beverage products in the United States.

PepsiCo is also strategically promoting smaller portions of its products in order to drive higher profits and revenue. The company markets the smaller products as a healthier option for consumers who want to manage calories. The Frito-Lay North America and PepsiCo Americas Beverage segments both enjoyed a 3% favorable impact from smaller packaging.

In the next part of this series, we’ll look at PepsiCo’s segment performances.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - PepsiCo’s 2Q15 Earnings Beat Analysts’ Estimates

• Part 3 - PepsiCo’s Frito-Lay North America Segment Outperforms in 2Q15

• Part 4 - PepsiCo Sees No Spark in US 2Q15 Soda Beverage Volumes