• PepsiCo reported a 3.1% decline in revenues during the second quarter with the   company’s beverage business, in particular, coming under pressure due to the   coronavirus pandemic. Despite the decline, revenue came in above consensus, with analysts projecting $15.38bn vs $ 15.95bn reported.

  • Adjusted   EPS declined by 11% to $1.32 for the quarter, although this was ahead of   expectations of $1.25.

  • On a   positive note, free cash flow increased to $292 million in the quarter from   $263 million in the corresponding quarter in 2019.

  • Although   the beverage division came under pressure, foods under the Frito-Lay North   America unit rose 7% and Quaker Oats reported a 23% increase in revenues.   PepsiCo’s North America beverages unit, its company’s largest, fell 7% as   restaurants and other points of sale remained closed.

  • Looking   ahead, the company sees snacks and food businesses remaining resilient, with   the beverages expected to perform better during the second half of the year.

  • The current results highlight the benefits of a diverse portfolio. It also highlights the outstanding qualities of Pepsi. Despite the diversified nature of the business, Pepsico has continually delivered excellent returns to investors. This is highlighted by the 2020 outlook, with management expecting total cash returns to shareholders of approximately $7.5 billion, comprised of dividends of $5.5 billion and share repurchases of $2 billion. Given the severe impact the coronavirus has had on so many businesses we find this ability to reward shareholders quite remarkable.