PepsiCo, Inc. PEP reported Tuesday its fiscal third-quarter earnings report.
What Happened
PepsiCo said it earned $1.59 per share in thequarter on revenue of $16.49 billion versus expectations of $1.57 per share and $16.36 billion. Organic revenue grew 4.9 percent in the quarter, while net income improved from $2.144 billion a year ago to $2.498 billion. Core gross margin contracted 10 basis points and reported gross margin dipped 29 basis points.
By segment, Frito-Lay North America profit rose 3.5 percent, Quaker Foods North America profit fell 1.5 percent, North America Beverages profit fell 14 percent.
Why It's Important
PepsiCo's profit margin shortfall could be attributed to expense timing since management's guidance for the full year was unchanged, Susquehanna Financial Group's Pablo Zuanic said in a note. The margin decrease in the North American Beverage business remains a drag on overall profitability, the price/mix in the business improved to 2 percent from 1 percent in the first half of 2018.
What's Next
PepsiCo's 2015 partnership with Starbucks Corporation SBUX won't expand into the restaurant business, the company said on its post-earnings conference call. Management will be "critically" looking at the cannabis market, although the company is "not prepared to share any plans we have in this space right now."
PepsiCo's stock was trading lower by 2 percent to $108.52.
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