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Higher Prices Lift Pepsico's Profit

By Donna Ahern
Higher Prices Lift Pepsico's Profit

PepsiCo Inc. reported second-quarter revenue and profit that topped Wall Street estimates as higher sales in its Frito-Lay unit in North America helped offset sluggish demand for beverages.

Pepsi's beverages unit, which makes carbonated soft drinks, has been struggling to reverse a four-quarter decline in sales as consumer taste shifts to low-calorie and low-sugar alternatives.

Sales in its North America beverage unit fell about 1% to $5.19 billion in the quarter, the company said, but narrowly beat market expectations.

Snacking Focus

To overcome weak soda sales, Pepsi has been focusing on growing its snacks business by experimenting with new flavors, healthier methods of preparation and packaging designs.

These efforts led to a 4.3% rise in sales at its Frito-Lay division that makes Cheetos and Doritos tortilla chips.

Net income attributable to the company fell to $1.82 billion, in the second quarter ended 16 June, from $2.11 billion, a year ago, mainly due to higher costs for transportation and raw materials.

Excluding one-time items, the company earned $1.61 per share, beating analysts' average estimate of $1.52 per share.

Total revenue rose 2.4% to $16.09 billion, edging past analysts' average estimate of $16.04 billion, according to Thomson Reuters I/B/E/S.

Shares of the beverage and snack company were marginally up about 1% in premarket trading on Tuesday.

The company's shares have declined about 10% this year, steeper than bigger rival Coca Cola's 3.2% drop.

News by Reuters, edited by Donna AhernClick subscribe to sign up for the Checkout print edition.


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