The company's strong performance was supported by growth in sales of chips and breakfast cereals.
PepsiCo reported unexpectedly strong financial results for the past quarter, despite the difficult epidemiological situation in the main markets for its products. By betting on the production of chips and breakfast cereals and reducing the production of carbonated drinks in quarantine conditions around the world, the company increased revenue by 7.9%, while analysts had forecast an increase in sales of no more than 3.6%.
According to the RetailDetail portal, net revenue PepsiCo in the first quarter of 2020 was $13.9 billion. The strong performance of the company was largely due to the growth in sales of chips - division Frito Lay reported an increase in revenue for 7%. In addition, demand for breakfast cereals has increased significantly under quarantine conditions - Quaker also increased revenue by 7%, which turned out to be significantly higher than expected.
“There are real changes in consumption, especially in two areas. First, it's breakfast at home. Secondly, people are working remotely and snacking more often during the day… The beverage industry is more challenging in this regard because most out-of-home channels (sales) are still closed,” commented PepsiCo CFO Hugh Johnston.
AT Coca Cola Company, on the contrary, noted a decrease in revenue starting from April. Analysts attribute this to the fact that the company traditionally receives about 40% of turnover from the sale of products designed for consumption outside the home. At the same time, PepsiCo's share of such products in total revenue is only 10%. The company predicts that the second financial quarter for manufacturers will be more difficult, given the closure of cafes, restaurants, cultural and entertainment facilities. PepsiCo's revenue is expected to fall between 1 and 5% over the next three months.