PURCHASE, NY. – Neither a difficult quarterly comparison nor Mother Nature could slow PepsiCo, Inc. during the first quarter of fiscal 2021. Company earnings and sales rose as both the company’s North American beverage and snacks businesses performed well during the period.
“We are pleased with our results for the first quarter as we successfully overcame challenges related to difficult year-over-year comparisons, uneven recoveries across many of our international markets and weather-related business disruptions in the US,” said Ramon Laguarta, chairman and chief executive officer.
Net income for the quarter ended March 20 was $1.7 billion, equal to $1.24 per share on the common stock, and an improvement over the same period of the previous year when the company earned $1.3 billion, equal to 96¢ per share.
Sales for the quarter were $14.8 billion, up from $13.9 billion the year before.
Both Frito-Lay North America and PepsiCo Beverages North America (PBNA) performed well during the quarter, generating $1.2 billion and $366 million, respectively, in operating profit. Frito-Lay sales were $4.2 billion, up from $4.1 billion the year before, and PBNA sales exceeded $5 billion, up from $4.8 billion.
Frito-Lay’s share performance has accelerated in the last six months, most notably in the last three months, Mr. Laguarta said.
“We're seeing more and more small-portion consumption in the snacks business and, to a certain extent, also in the beverage business.”
– Ramon Laguarta, PepsiCo
“It's the fact that we're seeing more and more small-portion consumption in the snacks business and, to a certain extent, also in the beverage business,” he said. “So smaller units, especially now in the form of multi-packs, given there is an increase in home consumption, that's the consumer package that is growing the fastest. And I think that the team has been very good at providing more personalization around that, creating more combination of multipacks, which drives eventually — given that consumers like variety, it drives performance.”
Frito-Lay North America is based in Texas and the severe weather and subsequent power outages that affected much of the region impacted the business unit.
“Frito was particularly impacted by the winter storm because we have a lot of infrastructure in the south,” Mr. Laguarta said. “A lot of our manufacturing and depots are there in the south. So, it was particularly impacted. We're slowly recovering from that situation, both raw materials and actual manufacturing, and we’re very close to having a normal supply chain now.”
The improvement in PBNA quarterly performance was due several factors, Mr. Laguarta said.
“There's better portfolio mix,” he said. “There is … better revenue management across the different channels. But there is also an important productivity journey that the team started. So, our cost per unit across many levers of the P&L are also improving.”
He added that PBNA’s overall competitiveness has improved as management has worked to improve the performance of individual brands.
“We started with Pepsi,” Mr. Laguarta said. “Pepsi now is growing — has been growing for the last 1.5 years at a good level and is starting to gain share in CSDs (carbonated soft drinks), outgrowing some of our competitors.
“We went in with Gatorade, our second-largest brand. And again, yes, Gatorade is not growing share in the sports drink category, but it's been 1 of the top 3 brands contributing to overall growth of LRB (liquid refreshment beverage) in 2020 and continues in 2021. I mean, the growth of Gatorade has been very strong, not only because of what has been an amazing platform for the brand in Gatorade Zero, but also by growing the rest of the portfolio.
“And then third, Mountain Dew, which was our pending third brand. It took us a little bit longer but if you see the growth of Mountain Dew in the last two quarters, especially the last quarter, it’s been very high. And it’s not only the fact that we’ve added innovation, but our base Mountain Dew is growing again at a very good level.”
Outside of North America, PepsiCo sales fell slightly in Europe and Latin America, but rose in Africa, Middle East and South Asia as well as Asia Pacific, Australia, New Zealand and China.