PepsiCo second-quarter profit tops Wall Street view
NEW YORK (Reuters) - PepsiCo Inc (PEP.N) reported a bigger-than-expected rise in quarterly profit on Wednesday, as the food and beverage maker benefited from strong international demand, acquisitions and the weak U.S. dollar.
The maker of Pepsi-Cola, Frito-Lay snacks and Quaker Oatmeal, whose shares were unchanged in morning trade, also affirmed its full-year earnings outlook and raised its target for share buybacks.
PepsiCo said net income rose 9 percent to $1.7 billion, or $1.05 per share, in the second quarter that ended June 14, from $1.56 billion, or 94 cents per share, a year earlier.
Excluding gains in the value of the company's commodity hedging positions, earnings were $1.03 per share.
Analysts on average were expecting $1.02 per share, according to Reuters Estimates.
Net revenue rose 14 percent to $10.95 billion.
Since PepsiCo makes a wide range of products and does business in many countries, it has had an easier time offsetting the industrywide pressures of soaring commodity costs and a U.S. economic slowdown.
The company, based in the New York City suburb of Purchase, said foreign exchange rates contributed 4 percentage points to revenue growth and 3 points to profit growth. Acquisitions added 3 points to revenue growth and 1 point to profit growth.
The weakness of the U.S. dollar against many other currencies increases the value of overseas sales when they are converted to dollars for inclusion in companies' income statements.
Credit Suisse analyst Carlos Laboy said in a research note that Pepsi's results again demonstrate its "ability to make numbers in an ugly environment".
"As good as numbers are today, however, we see two major uncertainties looking ahead," Laboy said. He cited rising commodity costs at Frito-Lay North America that will not be offset with price increases during the current quarter and the performance of the North American beverage business.
COSTS RISE, DRINK SALES SLOW
Company-wide sales by volume rose 5 percent, despite a 1 percent decline in the Americas beverage business, as cash-strapped U.S. consumers cut back on buying drinks at convenience stores and gas stations.
Beverage volume fell 3 percent in North America, with carbonated drinks such as Pepsi-Cola, Mountain Dew and Sierra Mist falling 2 percent, and noncarbonated drinks such as Aquafina water, Gatorade sports drink and Tropicana juice falling 4 percent, due to a double-digit decline in unflavored bottled water.
Volume rose 2 percent in the Americas foods business, with Frito-Lay and Quaker Foods both expanding volumes 2 percent. Continued...
