Yahoo Finance Can PepsiCo’s 2Q15 Sales Grow after Disappointing Two Quarters?
Will PepsiCo Stay ahead of Wall Street in 2Q15?
PepsiCo to announce second quarter results
On July 9, PepsiCo (PEP) will report its results for the second quarter of fiscal 2015 ending June 13, 2015. Based on guidance issued in April, PepsiCo expects foreign-exchange translation to have an adverse impact of 11% on 2Q15 net revenue and 10% on fiscal 2015 net revenue.
PepsiCo expects its fiscal 2015 organic revenue growth to be in the mid-single digits. Consensus Wall Street analysts’ estimates expect 2Q15 revenue to come in at $15.8 billion.
Revenue down in past two quarters
PepsiCo’s revenue fell by 0.8% and 3.2% in 4Q14 and 1Q15, respectively, on a year-over-year basis. The company’s results in the past two quarters were significantly impacted by currency headwinds. PepsiCo’s 1Q15 revenue, however, was in line with consensus analysts’ revenue estimates.
Despite currency headwinds, rival Coca-Cola (KO) reported a 1.3% rise in its 1Q15 revenue due to increased volumes and higher pricing. Dr Pepper Snapple (DPS) reported a 3.8% increase in its 1Q15 revenue, driven by higher volume and a favorable segment as well as product mix.
Food versus beverage business
PepsiCo’s food business, particularly the Frito-Lay North America division, has been outperforming the company’s beverage business. In 1Q15, Frito-Lay North America revenue increased by 3.0%, while net revenue for the PepsiCo Americas Beverages segment was essentially flat.
The performance of PepsiCo’s beverage business has been impacted by the softness in demand for carbonated beverages. According to Beverage Digest, US carbonated soft drink (or CSD) volumes fell by 0.9% in 2014, making it the tenth straight year of decline.
Based on data provided by Beverage Digest, CSD volumes for Coca-Cola and PepsiCo fell by 1.1% and 1.4%, respectively. CSD volumes of Dr Pepper Snapple were flat in 2014. Beverage giants are aggressively developing their non-soda drinks portfolio to offset the weakening demand for soda beverages.
PepsiCo makes up more than 4.6% of the portfolio holdings of the Consumer Staples Select Sector SPDR Fund (XLP) and ~0.8% of the iShares Core S&P 500 ETF (IVV).
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