PepsiCo (NYSE:PEP) reported organic/core earnings and revenue growth in the first quarter of 2016. The global food and beverage company said its core earnings increased 7% to $0.89 per share, higher than the $0.81 per share expected by Wall Street analysts. On reported basis, its earnings were $0.64 per share.
According to PepsiCo, its revenue on reported basis declined 3% to $11.86 billion from $12.22 billion. On organic basis, its organic revenue grew 3.5%. Wall Street analysts expected the food and beverage company to report $11.88 billion in revenue.
During the quarter, PepsiCo’s core gross margin climbed 130 basis points and operating margin increased 165 basis points due to the implementation of effective revenue management strategies and productivity initiatives.
Its reported gross margin expanded 160 basis points and reported operating margin dropped 105 basis points due to a $373 million non-core impairment chared related to 5% indirect equity interest in TAB.
PepsiCo new product launches generate solid growth
In a statement, PepsiCo Chairman and CEO Indra Nooyi said, “We delivered strong first quarter operating results driven by balanced execution of our commercial agenda and productivity programs.”
Nooyi added that the company’s marketing initiatives and new product launches are generating solid, organic, topline growth. Its focus on driving greater efficiency throughout its operations also contributed significantly to attractive core gross margin expansion.
According to PepsiCo, the demand for its Naked, cold-pressed fruit and vegetable juices and Lipton teas was strong. Nooyi said the company widened its beverage portfolio to reduce its dependence on colas. She noted that only 12% of its revenue comes from Pepsi colas, less than 25% from fizzy drinks worldwide.
Business outlook
PepsiCo reaffirmed its 2016 outlook and expected a 4% organic revenue growth. The company expected its core earnings to be around $4.66 per share.
Additionally, the company estimated to experience long-single-digit raw material deflation, productivity savings of approximately $1 billion, and more than $10 billion in cash flow from operating activities and over $7 billion in free cash flow excluding certain items.
PepsiCo also expected to return total of around $7 billion to shareholders through dividends and stock buybacks.
 reported a 7% increase in core earnings to $0.89 per share, higher than the $0.81 per share expected by Wall Street analysts.){kind=link}