Higher Profit for PepsiCo Despite Weaker Revenues

The American beverage manufacturer PepsiCo reported a higher net profit in the fourth quarter of 2015 compared to the previous year, but also weaker revenues, the decline of which was somewhat mitigated by stronger sales in the key North American market in the context of a strong dollar.

The company’s net profit amounted to $1.72 billion, compared to $1.31 billion in the same period a year earlier, according to the financial report of the American soft drink giant. However, net revenues decreased by seven percent to $18.59 billion.

Revenues in the North American beverage segment increased by two percent in the fourth quarter, ending December 26, and accounted for nearly one-third of total revenues.

PepsiCo is introducing beverages with lower sugar content and more natural ingredients, as consumers in North America, its largest market, have begun to pay more attention to calories and are opting for products they consider healthier.

The company also announced an increase in the annual dividend to $3.01 per share, up from $2.81 the previous year.

Regarding business performance estimates, PepsiCo expects its adjusted profit in 2016 to be lower than analysts’ forecasts, citing the strong dollar and the exclusion of its operations in Venezuela from the financial report as reasons.

Pepsi’s traditional rival, Coca-Cola, reported earlier this week higher-than-expected revenues and earnings in the last quarter of the previous year, supported by sales of beverages in smaller cans and bottles, aggressive cost-cutting, and lower raw material costs.

Coca-Cola’s revenues in the last quarter of the previous year reached $10 billion. Although three percent lower than in the same period a year earlier, they exceeded analysts’ expectations of $9.9 billion. Meanwhile, net profit attributable to shareholders rose by 61 percent during that period to $1.24 billion.