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PepsiCo, Inc. (PEP) Posts Q1 Core EPS of 83c; Offers Outlook

April 17, 2014 7:01 AM

PepsiCo, Inc. (NYSE: PEP) reported Q1 EPS of $0.83, versus the analyst estimate of $0.75. Revenue for the quarter came in at $12.62 billion versus the consensus estimate of $12.43 billion.

Core EPS includes a $0.02 impact from the one-time gain related to the sale of agricultural assets in Europe. Core EPS excludes a net impact of $0.01 per share related to mark-to-market net gains on commodity hedges and a $0.05 negative impact from restructuring charges. Mark-to-market net gains and losses on commodity hedges are subsequently reflected in core division results when the divisions recognize the cost of the underlying commodity in operating profit.

2014 Guidance and Outlook:

Consistent with its previous guidance for 2014, the company expects 7 percent core constant currency EPS growth versus its fiscal 2013 core EPS of $4.37. Based on the current foreign exchange market consensus, the company currently expects foreign exchange translation to have an unfavorable impact of approximately 4 percentage points on full year core EPS growth in 2014.

Excluding the impact of structural changes and foreign exchange translation, organic revenue in 2014 is expected to grow mid-single digits versus 2013, consistent with the company's long-term target. Based on the current foreign exchange market consensus, the company currently expects foreign exchange translation to have an unfavorable impact of approximately 3 percentage points on full year net revenue growth in 2014.

For 2014, the company expects low-single-digit commodity inflation and productivity savings of approximately $1 billion. The company expects higher interest expense driven by increased debt balances and a core effective tax rate of approximately 25 percent.

The company is targeting over $10 billion in cash flow from operating activities and more than $7 billion in free cash flow (excluding certain items) in 2014. Net capital spending is expected to be approximately $3 billion in 2014, within the company's long-term capital spending target of less than or equal to 5 percent of net revenue.

The company expects to return a total of $8.7 billion to shareholders in 2014 through dividends of approximately $3.7 billion and share repurchases of approximately $5.0 billion.

For earnings history and earnings-related data on PepsiCo, Inc. (PEP) click here.

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