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Pepsico barely beats revenue estimates in Q4 2017

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(FinancialPress) — Frito-Lay chips paved the way for Pepsico Inc (PEP) to beat Q4 revenue estimates set by Wall Street.

The Dorito and Lays maker posted revenue to the tune of $19.53 billion to cap off 2017 – a slight rise from the previous quarter. Analysts expected a lower revenue level of $19.39 billion. Even with the outperformance of the consensus, revenue was considered flat by the market.

The net loss recorded by the snacks and beverage company was of $710 million, which translates to 50 cents per share. During 2016, over the same period, the company reported a profit of $1.40 billion – 97 cents per share. This showcases a $2.5 billion one-time variation year-on-year, linked to the new U.S. tax laws promulgated.

The results have prompted the company to take corrective action. It has announced that it will cut some jobs over 2018, and will also be handing out some bonuses of up to $1,000 to employees.

The layoffs will affect roughly 1% of its 110,000-strong workforce – specifically on the corporate level.

The bonuses will go to employees in the manufacturing and delivery areas of the company.

Sales by the company slipped in North America, including its Frito-Lay unit, the soda and water unit that makes Tropicana and Mountain Dew, and oatmeal unit Quaker. Sales in Africa, Latin America and Europe rose and rallied overall revenue.

The company expects 2018 adjusted earnings of $5.70 per share. Analysts predict $5.67 per share.

Shares of PepsiCo Inc. lost in Tuesday trading after the fiscal report went live.

Ruben is a South American writer who focuses on the state of the cryptocurrency, cannabis and tech industries worldwide.

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Kraft Heinz posts savory Q2 sales

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(FinacialPress) — Q2 financials for Kraft Heinz (KHC) have been made public, and the company posted tasty numbers. Results handily beat estimates set by Wall Street analysts. Even so, investors are left wondering if the company will drop a big part of its liquidity soon with a major acquisition.

The results propped up company stock by a full 9%. However, just like other companies in its sector, shares have experienced a downward trend over 2018. Thus far into the year, and even accounting for the pop in value caused by the positive results, its shares still have lost 20% of their 2017 value.

Kraft Heinz and its competitors have had to deal with increasing competition pressure from consumer good giants such as Costco(COST), Kroge (KR), Amazon (AMZN) and Walmart (WMT) – and their lower price offerings.

Added to that, commodities used as raw materials for its products and packaging are on the rise. Namely, agricultural products, pulp and aluminum.

Transportation has also become an issue. A trucker strike in Brazil, labor shortages in the US and rising oil prices have raised shipping rates considerably.

All of these factors have fueled rumors of consolidation within the food industry; the main target of these being Campbell Soup (CPB

These rumors were first reported by the NY Post in late June, citing Kraft Heinz and General Mills as potential suitors for the takeover.

A follow up piece published just a day before the quarterly report was posted noted that Kraft Heinz is taking a “preliminary look“ at the Campbell acquisition. CPB shares went up 4% on heels of the news.

Spokesmen for both Kraft Heinz and Campbell Soup declined to comment. CNBC released yet another report revealing that Kraft Heinz passed up on the opportunity of acquiring Pinnacle Foods in 2017.

In the regulatory filing to the SEC pertaining to the timeframe in which the talks allegedly took place, Pinnacle revealed that there were brief talks of a merger with an undisclosed company – but that ultimately the mystery company opted out of the deal.

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PepsiCo surges in Q2; food biz paves the way

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(FinancialPress) — Centennial snack and fizzy drink maker PepsiCo released it‘s 2nd quarter results this week. The results led the way to a healthy and much needed 4% rise in the company‘s stock value.
Pepsi has been one of several pop manufacturers that have been going through a rough patch, affected by trend shifts towards healthier, more natural drinking habits. 2017 saw soda sales drop to a 32-year record low. That, in turn, made the company shift its efforts towards its snack business units – Frito-Lay; maker of Doritos and Cheetos. The business unit achieved a 5% profit increase in North America.
2017 has been a difficult year for PepsiCo. Company stock has dropped 8% over the current exercise, but the positive results and subsequent rise in share price might signal the beginning of an upward trend. Marketing spending for their beverage products has increased significantly, but results might take time to be tangible – and the extra spending will likely affect their bottom line for the next quarter.
Pepsi‘s arch-nemesis, Coca-Cola, has also upped its bet on marketing spending – by even more than the former. Adding in the recent acquisition of Dr. Pepper Snapple by Keurig, the market finds itself with an iron-hot trident of beverage behemoths aggressively competing to overtake the market.

A shifting landscape

The state of the market is a faithful reflection of consumers turning away from less nutritional beverage and food options towards healthier, more natural products. Companies that have historically commercialized fat and sugar-filled products have begun to shift in response to a market that no longer feels like they are getting catered to. Pepsi, for example, is in the process of acquiring Bare Foods to bring healthier products into its fold. The purchase brings kombucha company KeVita to PepsiCo‘s portfolio. KeVita grew 66% in 2017 alone.

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Hedge fund manager Dan Loeb: Nestlé ‘overly complex, lethargic’; ‘missing too many trends’

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(FinancialPress) — Dan Loeb, a big-time hedge fund manager, is not impressed with Nestlé‘s performance.

Loeb finds that the multinational food corporation is taking a “muddled strategic approach“ — one that is preventing the Kit Kat manufacturer from keeping up with new trends and competitors.

“Nestle’s insular, complacent, and bureaucratic organization is overly complex, lethargic, and misses too many trends,” he said in a letter directed at the company‘s management, published last week.

The billionaire‘s activist fund is Third Point. The fund acquired a $3.5 billion stake in Nestlé 1 year ago. At the time, the goal was to push for a new strategy to bolster profitability and sales volume.

Loeb pulled no punches, continuing to state that “The Company has been woefully late to participate in some of the key new trends that have driven growth in food and beverages, allowing incipient brands and more focused competitors to capture market share. Even without internal innovation, Nestlé’s growth might have been faster if the Company had adopted a more aggressive approach to acquiring fast-moving smaller brands.“

Nestle‘s 2017 sales were lagging, logging a weak 2.4% growth. The increase was the lowest in over two decades. Investors have taken notice, and the company‘s stock has devalued 8% in 2018.

The letter continued to state that while Third Point recognizes that there are real changes being implemented by Nestlé, they are too slow and small – which makes it doubtful that they‘ll be able to consistently meet its targets with its current product portfolio.

“We are concerned that Nestle does not fully appreciate the rapidly occurring shifts in consumer behavior that threaten its future,” he added.

Third Point has since published a website called NestleNOW, where investors can find the letter in full and a 34-page presentation aimed to press the issue on the Swiss company.

 

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