PepsiCo (PEP, Overweight) reported solid second-quarter results that beaten both our expectations and those of consensus, largely because of strong profitability, affirmative net pricing and emerging market growth. Company posted the earnings of $1.32 per share versus our estimation of $1.23 with revenue of $16.89 billion compare to consensus estimates of $16.79 billion with 0.5 % growth year over year.
In second quarter, volumes in the beverage and snack categories have seen growth of 1 percent but carbonated soft drink volume in the North American market dropped by 2%. Gross margin increased to 54% as input costs dropped by 1.5% to $7.78 billion.
With strong results in first half of year, company now estimates FY 2014 EPS of $4.53 (up 8 year over year, including a forecast 4% negative impact from currency effects) and revenue to grow at mid-single digits. Management expects core food and beverage demand remains solid in second half of year too.