Pepsico reports increase in quarterly profits, thanks to new “guilt-free” range

PepsiCo Inc (NYSE:PEP) has reported an increase in quarterly revenue and profit as the company is holding back on costs and investing on the demand for healthier drinks and snacks.

PepsiCo reported earnings of 94 cents a share, beating forecasts of 91 cents a share and up 5 cents from a year ago. chief executive Indra Nooyi

According to the chief executive Indra Nooyi, the results came “despite challenging food and beverage industry trading conditions in North America”.

Investing heavily into the demand for healthier drinks and snacks has helped the company’s increase in profits. 45 percent of PepsiCo’s net revenue comes from “guilt-free” products; drinks that have less than 70 calories per 12 ounces and food that has lower amounts of saturated fat and salt.

PepsiCo has made big changes and diversified to feed this demand. In the past year, brand has introduced probiotic versions of its Tropicana juices and has acquired Kevita — which makes fermented tea drink kombucha and other similar drinks.

The company also benefited from the lower raw material costs and the productivity gains from various cost-cutting plans, which included closing plants, simplifying organisation and management structures and investing in their manufacturing automation.

Despite revenue from the US drinks company rising 2.3 percent to $4.46 billion, some analysts remain cautious.

“The quality of the quarter was disappointing as organic revenue, gross margin, and operating margin all came in weaker than we anticipated,” wrote the J.P. Morgan Securities analysts in a note.

Earlier this month, PepsiCo were involved in an advertising outrage, where they were forced to pull an ad featuring model Kendall Jenner. The Huge backlash was faced as many argued the ad was trivialising rights protests and public unrest in the United States.

The company expects organic revenue to grow at least 3 percent, slower than the 3.7 percent in 2016.