PepsiCo Q2 results: ‘we’re focused on driving costs out of the business’

By:
on Jul 12, 2022
  • PepsiCo reports better-than-expected results for its fiscal second quarter.
  • CFO Hugh Johnston discussed the earnings report on CNBC's Squawk Box.
  • Shares of PepsiCo have recovered more than 10% from their YTD low.

PepsiCo Inc (NASDAQ: PEP) is in the green on Tuesday after reporting better-than-expected results for its fiscal second quarter. The beverage giant also reiterated its full-year guidance.

PepsiCo Q2 results

  • Net income printed at $1.43 billion versus the year-ago figure of $2.36 billion
  • Per-share earnings of $1.03 were significantly below $1.70 in Q2 of previous year
  • Adjusted for one-time items, EPS stood at $1.86 in the recent financial quarter
  • Revenue jumped 5.2% YoY to $20.23 billion, as per the earnings press release
  • FactSet consensus was for $1.74 of adjusted EPS on $19.51 billion in revenue

According to PepsiCo, revenue from all three segments (North America) topped Wall Street estimates. The stock has recovered more than 10% from its year-to-date low.

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CFO Hugh Johnston’s remarks

Cost of sales were up 6.0% resulting in a 40 basis points hit to the gross margin. Commenting on the quarterly results, CFO Hugh Johnston said on CNBC’s “Squawk Box”:

We’re facing inflation and we think that’s going to persist for a while but we’re taking enough pricing to manage it. Our focus is on how do we drive costs out of the business; how do we leverage automation, digital technology to make ourselves more efficient.

PepsiCo full-year outlook

PepsiCo continues to see $6.63 of adjusted per-share earnings this year; roughly in line with the analysts’ call for $6.64. The finance chief added:

We’re gaining share in most of our markets around the world and we’re also growing volumes. We’ve reinvested into the business and seeing costs managed better despite a tough inflationary environment is the fruit of that.

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