PepsiCo Inc's sales topped Wall Street forecasts in the fourth quarter, as higher demand at its snacks business that makes Doritos and Cheetos made up for a decline in sales of sugary drinks. As consumers increasingly ditch sodas and sugary drinks, Purchase, New York-based Pepsi has sharpened its focus on snacks as well as healthier beverages.
Indeed, Pepsi rival Dr Pepper Snapple agreed to merge with Keurig Green Mountain last month in a $21 billion deal as a way to lower its reliance on soft drinks. In the quarter ended Dec. 31, organic sales at Pepsi's Frito-Lay snacks division rose 5 percent, buoyed by demand for salty snacks and as prices rose 2 percent. Organic sales exclude the impact of currency, acquisitions and divestitures.
The snacks business contributes about 25 percent of overall revenue. Organic sales at PepsiCo's North American beverages business that sells Gatorade and Mountain Dew dipped 3 percent.
Total revenue rose slightly to $19.53 billion, topping analysts' average estimate of $19.39 billion, according to Thomson Reuters I/B/E/S. PepsiCo recorded a loss of $710 million, reflecting a $2.5 billion one-time charge related to new US tax laws, compared to a year-earlier profit of $1.40 billion.
Excluding one-time items, the company earned $1.31 per share, edging past analysts' estimates of $1.30. For 2018, the company expects earnings of $5.70 per share, slightly above analysts' estimates of $5.67. PepsiCo forecast organic revenue to be largely unchanged compared with 2017.
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