Pepsico, Inc. (NYSE:PEP) Q3 2018 Earnings Conference Call - Final Transcript
Oct 02, 2018 • 07:45 am ET
Good morning and welcome to PepsiCo's Third Quarter 2018 Earnings Conference Call. Your lines have been placed on listen-only until the question-and-answer session. (Operator Instructions) Today's call is being recorded and will be archived at www.pepsico.com.
It is now my pleasure to introduce Mr. Jamie Caulfield, SVP of IR. Mr. Caulfield, you may begin.
Thank you, Operator. With me today are Indra Nooyi, PepsiCo's Chairman and CEO; and Hugh Johnston, PepsiCo's CFO. We'll lead off today's call with a review of our third quarter performance and full year 2018 outlook and then we will move on to Q&A.
(Forward-Looking Cautionary Statements)
When discussing our financial results on today's call, we will refer to certain non-GAAP measures, which exclude certain items, such as the impact of the U.S. Tax Cuts and Jobs Act and other tax related items, foreign exchange translation and acquisitions, divestitures, structural and other changes from our reported results. You should refer to the Glossary and other attachments to this morning's earnings release and to the Investors section of PepsiCo's website under the Events and Presentations tab on full explanations and reconciliations of these non-GAAP measures.
Now, it's my pleasure to introduce, Indra Nooyi.
As most of you know we announced in August, that I'm stepping down as CEO of PepsiCo after 12 years in the role, if I could tomorrow. And so, today will be my final conference call with you. Actually, my 75th and final if you also include the calls I participated in as CFO. After we complete the primary business at hand, reviewing the results and outlook, and taking your questions. I'd like to ask for your patience and allow me to make a few concluding remarks at the end of the call.
So, moving on to business. For the quarter we generated $16.5 billion of net revenue driven by 4.9% organic revenue growth and delivered core earnings per share of $1.59 a 9% increase on a core constant currency basis. Overall, we are pleased with our operating and financial performance in the quarter. The organic revenue growth represents another quarter of sequential acceleration and the highest rate of organic revenue growth in 12 quarters.
The majority of our businesses again perform well, with particularly, strong performances by our international sectors and solid performance by Frito-Lay North America. And while North American beverages profit performance was impacted by inflation and a double digit increase in advertising expense. The sector posted 2.5% organic revenue growth, with the good balance between volume growth and net price utilization.
Frito-Lay North America delivered balanced volume growth and net price utilization driven by strong innovation and brand marketing. For example, in June, we launched stacy's cheese petites inspired by French cheese puffs, these bite sized cheese snacks have real cheese baked inside creating a sophisticated snacking experience. In fact, cheese is the primary ingredient, but cheese are the good source of calcium and have 6 grams of protein per serving. And they come in a resealable pouch making them great