Pepsi and Hasbro released their latest quarterly earnings reports before opening bell this morning. Pepsi posted adjusted earnings of 89 cents per share, beating the consensus of 81 cents per share, and $11.9 billion in sales, which was slightly ahead of consensus at $11.85 billion.
Hasbro posted earnings of 38 cents per share, and $831.2 million in sales, representing a 16% increase year over year. Both numbers beat the consensus estimates at 24 cents per share and $773.86 million in sales.
Pepsi’s profits slump on weakness in Latin America
Pepsi’s reported earnings were 64 cents per share, compared to 81 cents in last year’s first quarter. said currency headwinds impacted its sales by 4.5 percentage points. Currency issues relating to the Venezuelan bolivar also weighed on the beverage maker’s sales results. It did expand its core gross margin by 130 basis in the quarter, however, due to “revenue management strategies” and new productivity initiatives. The company increased its advertising and marketing expenses as well, which partially offset these gains.
The Frito Lay North America segment saw a 1% increase in organic volume and 4% increase in organic revenue. The Quaker Foods North America segment saw a 2% decline in volume and 2% decline in organic revenue, while the North America Beverage segment saw a 1% increase in organic volume and 2% increase in organic revenue.
Pepsi’s Latin America business saw a 3% increase in organic volume and a 9% increase in organic revenue, but net revenue tumbled 26% due to higher material costs, inflation in operating costs, the stronger U.S. dollar, and negative impacts from the deconsolidation of Venezuela. Operating profits for the region fell 20%. The Europe, Sub-Saharan Africa region was also impacted by the strong U.S. dollar and other negative items, although organic volume increased 1% and organic revenue climbed 2%. Net revenue for the region slipped 9%, while profits tumbled 40%. Asia, the Middle East, and North Africa recorded a 6% increase in organic volume and 3.5% increase in organic revenue.
Pepsi expects full-year core earnings of $4.66 per share for this year. The beverage maker’s stock climbed 1.01% to $104.78 per share in premarket trading.
Hasbro sales surge
Hasbro said the Boys category recorded a 24% increase in sales, while the Girls category grew 41% and the Preschool category grew 11%. Brand revenues climbed 1% on a reported basis, but currency exchange negatively impacted the toymaker’s growth. The Star Wars, Disney Princess and Disney’s Frozen brands drove Hasbro’s sales during the first quarter.
“Our focus on executing our Brand Blueprint continues to drive strong retail and consumer demand for our brands, while enhancing overall profitability of Hasbro,” said Hasbro Chairman, President and CEO Brian Goldner in a statement. “Hasbro Franchise Brand revenue increased behind continued double-digit growth in NERF and PLAY-DOH, overcoming expected difficult quarterly comparisons in TRANSFORMERS as well as a digital streaming deal in the Entertainment and Licensing segment recorded last first quarter. Demand for STAR WARS: THE FORCE AWAKENS products continued to be high and we benefited from the addition of DISNEY PRINCESS and FROZEN fashion and small dolls.
Net sales in the U.S. and Canada grew 28%, while International sales climbed 13% and Entertainment and Licensing revenue tumbled 30%. Hasbro said last year’s results benefited from a multi-year digital streaming agreement for TV programing for Hasbro Studios.
Hasbro shares rose 3.79% to $85.53 in premarket trades this morning.
