FILE PHOTO – Bottles of Pepsi are pictured at a grocery store in Pasadena, California, U.S., July 11, 2017. REUTERS/Mario Anzuoni/File Photo
(Reuters) – PepsiCo Inc forecast a surprise drop in full-year profit on Friday, hit by a stronger dollar, increased investments in its business and a higher tax bill.
Operating profit at Pepsi’s North America beverages unit declined 12 percent in the quarter as it spent heavily on marketing Diet Pepsi and Pepsi Zero, to combat arch rival Coca-Cola’s low-sugar offerings.
The company expects 2019 adjusted profit per share to drop 3 percent to $5.50, while analysts on average had expected a 3.5 percent rise in profit to $5.86 per share, according to IBES data from Refinitiv.
Foreign exchange losses hurt reported net revenue performance, Chief Executive Officer Ramon Laguarta said in his maiden quarterly report.
Laguarta, however, said he expects the company to return to high-single-digit core constant currency earnings per share growth in 2020.
The company also posted fourth-quarter revenue and profit that was in line with expectations.
Sales at Pepsi’s Frito-Lay division, the unit that makes Lay’s potato chips and Doritos tortilla chips, rose 4 percent in the quarter.
Rival Coca-Cola Co also warned on Thursday that its earnings per share could fall in 2019, citing the strengthening dollar.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Bernard Orr and Saumyadeb Chakrabarty