PepsiCo's quarterly profit beats as advertising push pays off

(Reuters) – PepsiCo Inc (O:) beat quarterly revenue and profit estimates on Thursday, as ramped up advertising and new low calorie versions of Gatorade boosted demand for its beverages in North America.

Shares rose 3% to $138 in light premarket trading, as the company said it expects to meet or exceed its fiscal 2019 organic revenue growth target of 4%.

Since taking the helm last October, Chief Executive Officer Ramon Laguarta has charted out an aggressive spending plan to revive demand for out-of-favor sugary sodas and promote new flavors launched to cater to health conscious consumers.

PepsiCo’s advertising and marketing expenditure has jumped 12% so far this year as the company has splurged on new ads for its trademark Pepsi beverages, rounding off with a campaign centering around the National Football League’s 100th anniversary.

Overall beverage sales in North America rose 3.4% in the third quarter to $5.64 billion, also helped by new low sugar and organic versions of the Gatorade sports drink.

Net revenue rose 4.3% to $17.19 billion in the three months ended Sept. 7, beating analysts’ estimates of $16.93 billion, according to IBES data from Refinitiv.

However, net income attributable to the company fell to $2.10 billion, or $1.49 per share, from $2.50 billion, or $1.75 per share, a year earlier.

Excluding one-time items, the company earned $1.56 per share, beating the average estimate of $1.50.

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