PepsiCo CFO on Q4 results: ‘we have a lot of pricing power’

PepsiCo Inc (NASDAQ: PEP) reported market-beating results for its fiscal fourth quarter on Thursday. The stock is still down about 1.0% as shareholders focused more on a half a billion dollars decline in net income.

What the earnings report tells us

PepsiCo said its net income printed at $1.32 billion that translates to 95 cents per share. In comparison, it had posted a much higher $1.85 billion in net income or $1.33 per share. Adjusted for one-time items, its core EPS came in at $1.53.

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At $25.25 billion, the beverage giant noted a 12.4% annualised growth in revenue, as per the earnings press release. According to FactSet, experts had forecast $1.52 of adjusted EPS on $24.24 billion in revenue.

In North America, revenue was up 13% at Frito-Lay, 9.0% at Quaker Foods, and 13% at PepsiCo Beverages. On CNBC’s “Squawk Box”, CFO Hugh Johnston said:

With over 9.0% revenue growth for the year and 12% EPS growth, we feel really good about the momentum we have in our business. With Omicron, there was a bit more return to home in the latter part of Q4. But a great strength of PepsiCo is that wherever you are, we have products for you.

Guidance for fiscal 2022

For the full financial 2022, PepsiCo forecasts an increase of 8.0% in its core EPS versus analysts at 7.5%. Its estimate for 6.0% YoY growth in organic revenue was also ahead of the FactSet consensus of 5.4%.

The American multinational lifted its annual dividend from $4.30 per share to $4.60 per share and launched a new $10 billion share buyback programme on Thursday. The finance chief added:

There’s lots of cost challenges out there; supply chains are still challenged to some degree. But as we look forward into 2022, we ought to get through it with margins pretty well intact because, with the strength of our brands and innovation, we have a lot of pricing power to manage the cost input inflation.

Johnston forecasts commodity inflation to keep above 10% this year.