PepsiCo stands by outlook
NEW YORK (Reuters) - PepsiCo Inc (PEP.N) stood by its full-year 2008 earnings outlook on Thursday and said it would outline 2009 innovation plans for its North American beverage unit, where it faces weaker soft drink sales.
Pepsi said last month that soft drink volume in North America fell 3 percent in the fiscal third quarter, hurt by weak demand for beverages like Pepsi and Sierra Mist and bottled water, as consumers cut back in a contracting economy.
At the time, Pepsi Chief Executive Indra Nooyi said it would be hard to predict the future direction of the segment. Nooyi is due to speak about the company's plans at an investor conference later on Thursday.
Pepsi, which also makes Frito-Lay snacks and Quaker foods, had previously forecast 2008 earnings of $3.67 to $3.68 a share, excluding the impact of some items.
The company's confidence in its outlook should cheer investors, said William Pecoriello, a Morgan Stanley analyst.
Investors had feared the weaker beverage demand in the United States and a stronger dollar would lead PepsiCo to miss earnings expectations in the fourth quarter, he said in a note.
Pepsi shares fell 0.3 percent to $51.95, but outperformed a 2.4 percent decline in the Dow spurred by concerns over an auto industry bailout and new unemployment data.
Pepsi also said on Thursday that its largest bottler Pepsi Bottling Group's (PBG.N) restructuring plan and impairment charge is expected to hurt Pepsi's reported full-year earnings by 7 cents a share, but would not impact its core earnings results.
Pepsi Bottling's restructuring plan includes cutting some 3,150 jobs. The restructuring is expected to yield $150 million to $160 million in annualized pretax savings when completed, starting with savings of at least $70 million in 2009.
Rival Coca-Cola Co (KO.N) has had a more contentious relation with its largest bottler Coca-Cola Enterprises Inc (CCE.N), with public signs of a rift emerging last month over pricing.
At that time, the news sent the bottler's shares to a multi-year low on worries that the tension could hurt its business. Soft drink bottlers have already been hit by high costs and weaker demand for beverages from consumers who are facing job cuts, a credit crunch and higher prices.
Pepsi Bottling shares fell 1.5 percent. Coke shares slipped 1.5 percent to $41.64 while its bottler Coca-Cola Enterprises' shares were down 3.5 percent to $8.19 on the New York Stock Exchange.
(Reporting by Aarthi Sivaraman, editing by Maureen Bavdek, Dave Zimmerman)
