Please ensure Javascript is enabled for purposes of website accessibility

PepsiCo’s Quaker Foods Business Notches a 55% Profit Spike

By Demitri Kalogeropoulos – Jul 13, 2020 at 9:43AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The division helped offset sharp declines in on-the-go beverage sales.

PepsiCo's (PEP -1.73%) consumer foods division is enjoying unprecedented growth in the pandemic era. The company announced on Monday that its Quaker Foods segment, which markets home-prepared foods like cereals and pastas, expanded by 23% in the 12 weeks that ended in mid-June. That success allowed Pepsi to report flat organic sales for the period, even through its beverage unit took a big hit related to COVID-19 social distancing efforts. Rival Coca-Cola will announce its own results next week in a report that investors expect to show a much sharper sales decline due to its focused beverage portfolio.

Quaker Foods boosted profits at an even faster pace, with operating earnings jumping 55% and operating margin expanding by 6 percentage points. Still, Pepsi reported lower overall earnings, in part due to supply chain challenges and extra health-related costs.

A young girl eating cereal.

Image source: Getty Images.

In a conference call with investors, Pepsi said it is seeing its positive market share trends continue in the food segment even as economies opened back up in recent weeks. It plans to press that advantage over the next few months, including with higher marketing spending and new innovative launches like the upcoming Cheetos Mac 'n Cheese product set to release this fall.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pepsico, Inc. Stock Quote
Pepsico, Inc.
$165.75 (-1.73%) $-2.92
The Coca-Cola Company Stock Quote
The Coca-Cola Company
$56.12 (-1.51%) $0.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.