PURCHASE, N.Y. — Quaker Foods North America turned in its strongest quarter of organic revenue growth in three years, providing a boost to earnings and sales at PepsiCo, Inc. in the second quarter.
Net income in the second quarter ended June 15 totaled $2,035 million, equal to $1.45 per share on the common stock, up 12% from $1,820 million, or $1.28 per share, in the same period a year ago. Net revenues increased 2.2% to $16,449 million in the period.
“We’re very pleased with our results for the second quarter,” Ramon L. Laguarta, chairman and chief executive officer, said during a July 9 conference call with analysts. “Organic revenue grew 4.5% overall, with each of our six operating sectors contributing to the growth. I believe the solid growth we had in the second quarter is a good indication of the strength of both our product and geographic portfolios.”
Operating profit within the Frito-Lay North America (F.L.N.A.) division totaled $1,249 million in the second quarter, up 4% from $1,200 million in the same period a year ago. Net revenue in the division increased 4.5% to $4,010 million from $3,837 million.
“F.L.N.A. continued to post strong growth in the second quarter with organic revenue up 5% and solid market performance,” Mr. Laguarta said. “We delivered good net revenue growth in our key trademarks, including Lay’s, Doritos, Cheetos and Ruffles. In addition, we posted good growth across all channels in the U.S., led by high single-digit growth in convenience and dollar stores.
“We continue to invest across the business with the aim to drive sustainable better-than-industry growth, and this includes investing in plant and warehouse capacity, routes, sales technology, enhanced consumer and shopper data and insights and brand media. To this point, in the second quarter, F.L.N.A.’s A.&M. was up high single digits with investments across our portfolio of brands. And we’re pleased to note that F.L.N.A. was once again the largest contributor to double food and beverage U.S. retail sales growth in the quarter.”
Mr. Laguarta pointed to two key trends that have helped boost F.L.N.A.’s performance. First, the move by consumers to smaller packs. The shift has allowed PepsiCo to realize more pricing, he said. Second, consumers are looking for higher value products. PepsiCo is delivering by providing more functional benefits to its products, he said.
Operating profit within the Quaker Foods North America (Q.F.N.A.) division totaled $127 million, down 12.5% from $145 million a year ago. Net revenues, meanwhile, increased 2.5% to $540 million from $527 million.
“The second quarter was Quaker’s strongest quarter of organic revenue growth in three years, with organic revenue up 3% driven by net price realization and modest volume gains,” Mr. Laguarta said. “We’ve restored brand support across the Quaker portfolio, and we’ve returned to volume growth in Aunt Jemima and ready-to-eat cereals, each of which delivered mid-single-digit volume growth.”
Overall, net income at PepsiCo in the six months ended June 15 totaled $3,448 million, equal to $2.46 per share, up 9% from $3,163 million, or $2.23 per share, in the same period a year ago. Net revenues in the six months were $29,333 million, up 2.3% from $28,652 million a year ago.