Pepsi Reports Soft Drink Stabilization in North American Market

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(Bloomberg) — PepsiCo Inc. reported fourth-quarter sales growth that beat analyst estimates amid efforts to lift soft drink sales in its key North American market.

Organic sales, which strip out elements like currency volatility, rose 4.3% in the fourth quarter, versus an analyst estimate of 3.72%, according to a statement. The snack and beverage giant sees organic sales growing at a similar rate in 2020. Pepsi forecast core earnings per share of $5.88 in 2020, just shy of the average of estimates compiled by Bloomberg.

Pepsi shares rose less than 1% in early trading on Thursday. The stock has risen 6.9% this year.

The company is trying to tap demand for snacks like Doritos and Lay’s potato chips to offset a general decline in the consumption of sugary soft drinks. Frito-Lay North America posted 3% revenue growth in the quarter, which was partially offset by higher advertising expenses.

Still, sales were up in the key North American beverage unit, which has faced pressure as consumers cut down on sugary soda and competitors flood stores with a host of new options. The business posted revenue growth of 4% for the period. European sales jumped by 15%, helped by its acquisition of SodaStream International Ltd.

The company is also offsetting higher commodity costs at its beverage business through cost cuts. Consumer-goods companies are bracing for the effect of the outbreak of coronavirus in China, which has disrupted daily life and killed more than 1,000. Pepsi didn’t mention the outbreak in its report so investors will be listening to the conference call for more details.

To contact the reporter on this story: Jonathan Roeder in Chicago at jroeder@bloomberg.net

To contact the editor responsible for this story: Sally Bakewell at sbakewell1@bloomberg.net

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