PepsiCo Inc (PEP.N) reported better-than-expected quarterly net revenue on Thursday as higher sales of snacks and non-fizzy beverages such as Gatorade in North America helped reduce the impact of a strong dollar.
PepsiCo increased its annual dividend to $3.01 per share from $2.81 and said it would return about $7 billion to shareholders this year, with about $3 billion through buybacks.
However, the company forecast 2016 adjusted earnings below many analyst estimates, citing a strong dollar and the exclusion of its Venezuelan business from its financial statements.
Revenue from PepsiCo's North American beverages business rose 2 percent in the fourth quarter ended Dec. 26, accounting for 31.5 percent of total revenue.
Wells Fargo Securities said in a pre-earnings note that its research showed that PepsiCo's beverage sales in U.S. convenience stores rose 3.2 percent in the quarter, helped by aggressive pricing and "solid" sales of Gatorade and Starbucks (SBUX.O) ready-to-drink coffee, which Pepsi distributes.
PepsiCo Chief Executive Indra Nooyi said warmer-than-usual weather also helped the company's drinks business.
"Gatorade does well when the temperature's above normal," she said on a conference call with analysts.
Higher prices and reduced pack sizes helped boost revenue by 2 percent in the company's North America snack foods business, which includes Frito-lay and Doritos chips.
"Pricing in North America is a key bright spot for PEP," Susquehanna analyst Pablo Zuanic wrote in a note.
PepsiCo, whose shares were down 1.3 percent at $96.33 in morning trading, reduced the size of its Frito's promotional potato chip bags in the United States last year, but retained pricing.
Traditional rival Coca-Cola Co (KO.N) reported better-than-expected quarterly revenue and profit on Tuesday, helped by sales of smaller cans and bottles, aggressive cost-cutting and lower commodity costs.
Frito-Lay North America and the North America beverage business were the only two PepsiCo units to report higher revenue in the quarter.
Net income attributable to PepsiCo rose 31 percent to $1.72 billion, or $1.17 per share in the period.
Excluding items, the company earned $1.06 per share, in line with analysts estimates, according to Thomson Reuters I/B/E/S.
Net revenue fell 7 percent to $18.59 billion, but beat analysts average estimate of $18.51 billion.
PepsiCo forecast 2016 adjusted earnings of $4.66 per share.
This was short of the average I/B/E/S estimate of $4.76, although it was not immediately clear if the figures were strictly comparable.
PepsiCo said it expected organic revenue growth of about 4 percent in 2016.
Graphic: Coca-Cola and Pepsico earnings (here)
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila and Ted Kerr)