Pepsi (PEP) Tops Q2 EPS by 5c; Boosts EPS Growth Outlook
Pepsi (NYSE: PEP) reported Q2 EPS of $1.35, $0.05 better than the analyst estimate of $1.30. Revenue for the quarter came in at $15.4 billion versus the consensus estimate of $15.37 billion.
2016 Guidance and Outlook
The Company provides guidance on a non-GAAP basis as the Company cannot predict certain elements which are included in reported GAAP results, including the impact of foreign exchange and commodity mark-to-market adjustments.
The Company expects:
- Based on current foreign exchange market consensus rates, foreign exchange translation to negatively impact reported net revenue growth by 4 percentage points;
- The 53rd week2 to contribute approximately 1 percentage point to reported net revenue growth;
- Approximately 4 percent organic revenue growth, excluding the impact of the 53rd week2 and structural changes, including the deconsolidation of our Venezuelan operations;
- 2016 core earnings per share of $4.71, driven by the following expectations and factors:
2015 core earnings per share
Expected core constant currency EPS growth (excluding Venezuela deconsolidation) - previously 8%
Negative impact of Venezuela deconsolidation
Negative impact of foreign currency translation3
Expected 2016 core earnings per share
In addition, the Company continues to expect:
- Low-single-digit raw material inflation including the impact of transaction related foreign exchange, and low-single-digit deflation excluding the impact of transaction related foreign exchange;
- The benefit of a 53rd week2 will be reinvested in certain productivity and growth initiatives in 2016;
- Productivity savings of approximately $1 billion;
- Lower corporate unallocated expense, driven primarily by lower pension expense;
- Higher net interest expense driven by higher debt balances;
- A core effective tax rate approximately even with the 2015 full-year core effective tax rate;
- Over $10 billion in cash flow from operating activities and more than $7 billion in free cash flow (excluding certain items);
- Net capital spending of approximately $3 billion; and
- To return a total of approximately $7 billion to shareholders through dividends of approximately $4 billion and share repurchases of approximately $3 billion.
For earnings history and earnings-related data on Pepsi (PEP) click here.