PepsiCo profit down as currency takes toll

PepsiCo's fourth-quarter revenue increased but profit fell and global beverages sales were only up slightly as the market for sugary drinks continues to sag amid a trend toward healthy living.

The global drink and snack maker recorded net income of $1.4 billion for the quarter, down 18% and missing S&P Global Market Intelligence estimates of $1.7 billion. On a per-share basis, earnings totaled 97 cents, falling from $1.17 a year earlier.

Chief Financial Officer Hugh Johnston told investors that the primary reasons for the declining profit were the impact of the strong U.S. dollar, which "continues to be a bit of a challenge," and higher capital expenditures.

The company said its core earnings when excluding the impact of currency rates rose 15%.

To be sure, the company faces a significant challenge as consumers second-guess sugary drinks. PepsiCo beverage sales rose only 1% for the period, compared to a year earlier, while sales of food and snacks rose 3%.

PepsiCo posted revenue of $19.5 billion, up 5% and matching S&P Global Market Intelligence estimates.

The company said it expects 2017 organic revenue growth of 3%.

"We concluded 2016 with another strong quarter of operating performance, capping off a successful year. We met or exceeded every financial goal we set for 2016, while delivering a good balance between revenue performance and productivity," PepsiCo CEO Indra Nooyi said in a statement.

"Looking ahead to 2017, we expect solid financial performance despite anticipated continued macroeconomic challenges."

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.