PepsiCo continued its consistent delivery of solid double-digit earnings growth, with earnings per share for the first quarter of 2002 up 14% to 38 cents over the year-ago period, on a comparable basis.
"We're pleased to have delivered our tenth consecutive quarter of double-digit growth in operating profits. All of our businesses contributed to our quality growth, led by strong top and bottom line results at our largest divisions, Frito-Lay North America and Pepsi Cola North America, along with a very strong quarter from Gatorade," said chairman and chief executive officer Steve Reinemund. "Our international results were also healthy, despite the impact of adverse global macroeconomic conditions. And all this was achieved while keeping the Quaker integration right on track. We're off to a great start, and our innovation pipeline and promotional calendars are strong for the balance of the year."
PepsiCo continued to deliver consistent volume performance, with total servings worldwide up 5% for the quarter. Servings of snacks worldwide grew 6% for the quarter, while worldwide servings of beverages grew 4%.
Net revenues grew 5% to more than $5 billion for the quarter, in spite of the impact of a difficult comparison with the very strong revenue growth enjoyed in the first quarter of 2001, and unfavorable currency exchange rates.
Frito-Lay North America reported an excellent first quarter, with 7% revenue growth driven by volume. FLNA's almost 11% operating profit growth was driven by leverage from that increased volume, and by the benefits of continuing productivity initiatives.
Solid performance in FLNA's core product portfolio came from "Tostitos," "Cheetos" and dips, as well as the introduction of newly sized "Quaker Chewy" granola bars. FLNA also benefited from ongoing innovation,including growth from "Lay's Bistro Gourmet" premium potato chips; "Lay's Kettle Chips" premium potato chips; "Tostitos Scoops" tortilla chips; "Go Snacks" bite-sized snacks; "Dipps" chocolate-covered "Quaker Chewy" granola bars; and "Bites" bite-sized "Quaker Fruit & Oatmeal" bars. FLNA will continue to roll out "Go Snacks" in the second quarter with three new flavors, as well as expanding its "Lay's Bistro Gourmet" and "Rold Gold" brands.
Pepsi-Cola North America had another strong quarter, with bottler case sales up 4.5% for the quarter. The performance was particularly impressive given the comparison with PCNA's strong performance in the first quarter of 2001. Concentrate shipments and equivalents increased more than 4%. The volume growth was driven primarily by product innovation, including the introduction of "Mountain Dew Code Red," "Pepsi Twist" and new package sizes of "Aquafina" bottled water.
The 7% increase in revenues and 15% operating profit growth reflected higher effective net pricing and increased volume, PepsiCo reported.
In the second quarter, PCNA predicts that it will continue to benefit from innovations launched in the second half of last year and the first quarter of this one. It plans to introduce several new products, including "Lipton Brisk Lemonade," "SoBe Mr. Green" and "Starbucks Doubleshot" espresso.
Volume for Gatorade/Tropicana North America in the first quarter of 2002 increased 4%, reflecting 20% volume growth for Gatorade, offset by continued softness in Tropicana's volume, which declined by 2%. Gatorade's strong performance was driven by new products, including "Gatorade Ice" Strawberry, Orange and Lime flavors; "Gatorade Extremo" flavors, including Mango, Citrico and Tropicale; a new "Gatorade Frost" flavor, Cascade Crush; and national rollout of "Propel" fitness water.
Tropicana's soft performance reflects continued decline in the grocery channel's chilled juice category, weakness in "Twister" ambient juices.
Initial results from the launch of "GoJ," Tropicana's new single-serve bottle of Tropicana Pure Premium orange juice, are reportedly very promising.
Quaker Foods North America delivered an exceptional 25% increase in operating profits in the first quarter, principally due to lower costs attained through synergy and productivity initiatives, as well as volume improvement. Volume and revenue both increased 4%.