Pepsi and Hershey released the earnings results from their most recently completed quarters before opening bell this morning.
Pepsi reported adjusted earnings of 83 cents per share on revenue of $12.2 billion for its first fiscal quarter. Analysts had been expecting earnings of 80 cents per share on revenue $12.2 billion. In the same quarter a year ago, the beverage maker reported revenue of $12.7 billion for the first quarter.
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Hershey reported adjusted earnings of $1.09 per share on net sales of $1.94 billion for the first fiscal quarter. Analysts had been expecting earnings of $1.17 per share on $1.96 billion in revenue. In the same quarter a year ago, sales were $1.87 billion.
Key metrics from Pepsi’s earnings report
Pepsi’s reported earnings were 81 cents per share, compared to 79 cents in the same quarter a year ago. The beverage maker reported a 4.4% increase in organic revenue and a 150 basis point expansion in core gross margin.
The company’s Frito-Lay North America segment saw a positive impact from productivity and lower commodity expenses but a double-digit increase in marketing expenses and cost inflation partially offset the impact. Pepsi’s Quaker Foods North America saw a negative impact from an impairment charge in connection with the dairy joint venture which productivity gains partially offset.
The Latin America Foods division saw productivity gains partially offset by inflation in commodities and operating costs. PepsiCo Americas Beverages saw productivity gains and lower commodity costs but higher inflation and marketing revenue partially offset those gains. In Europe, Pepsi saw negative impacts from inflation that was partially offset by better productivity. The beverage maker’s Asia, Middle East and Africa segment saw positive impacts from the refranchising of part of the company’s India bottling operations, better productivity and lower costs for commodities, but that was partially offset by inflation.
Pepsi reaffirmed its previous guidance for revenue and adjusted earnings per share growth of 7%. Management now expects foreign currencies to negatively impact core earnings by 11 percentage points.
Key metrics from Hershey’s earnings report
Reported earnings were $1.10 per diluted share, compared to $1.11 per share in the same quarter a year ago. Hershey said they missed their expectations mostly because of weakness in China, particularly in sales of its packaged goods. Management thinks the weakness is due to consumer confidence declines because of mixed macroeconomic data. The company did see increased chocolate sales in China, however.
Sales in North America were a little better than they expected, mostly due to timing. International and Other net sales were about flat with last year.
Hershey expects total consolidated sales to accelerate over the rest of the year. Management also expects net sales for the full year to increase by between 4.5% and 5.5%. They expect foreign currency to have a negative impact of about 1.5 percentage points on full year net sales growth.