Pepsi

Introduction

PepsiCo, Inc., (NYSE: PEP) earned $1.09 per share in the 12 weeks that ended 5 September, up from $0.99 last year. This post examines the Income Statement and compares the figures on it to our "look-ahead" estimates.

Discussion

In a second article, we will report PepsiCo's scores as measured by the GCFR Financial Gauges. The follow-up post will also provide the latest figures for the financial metrics we use to analyze Cash Management, Growth, Profitability and Value.

Our principal sources were the earnings announcement, the 10-Q for the quarter, and the Seeking Alpha conference call transcript. Some background information about PepsiCo and the business environment in which it is currently operating can be found in the look-ahead.

The company reported it is "on-track with its plans to acquire" Pepsi Bottling Group, Inc. (NYSE: PBG) and PepsiAmericas, Inc., (NYSE: PAS). The proposed transactions are expected to close later this year or early in 2010. Eric J. Foss, PBG's Chairman and CEO, will become CEO of the new PepsiCo Bottling North America (PBNA).

Revenue in the third quarter, on a GAAP basis, was 1.5 percent less than in the year-earlier period.  We had, by an odd symmetry, expected an increase of 1.5 percent.  We were looking for constant-currency Revenue growth of about 7.5 percent and a 6 percent reduction for changes in exchange rates.  In actuality, Pepsi achieved constant-currency Revenue growth of 5 percent, less 6.5 percent due to exchange rates.

PepsiCo International is the division in which Revenue increased the most,  2.5 percent, in the September quarter.  Revenue at the PepsiCo Americas Beverages division fell 9 percent.

The Cost of Goods Sold in the quarter equaled 46.8 percent of Revenue, which translates into a Gross Margin of 53.2 percent.  The Gross Margin was a little better than last year's 53.1 percent, for which PepsiCo deserves some credit, but we thought ...