CHICAGO (Reuters) - PepsiCo Inc (PEP.N) reported a quarterly profit just above analysts’ expectations, helped by strength in international snack and beverage markets and the recent acquisition of its North American bottlers.
The company, which makes Tropicana juice, Frito-Lay snacks and Quaker Oats cereals in addition to its namesake cola, stood by its full-year earnings forecast, assuaging some fears that it would take a more negative view on the impact of a stronger dollar on overseas sales.
Strength in emerging markets helped offset still-weak demand for carbonated soft drinks in North America.
“That’s really where the future growth is going to come, in Asia, the Middle East and Africa,” said Tim Hoyle, vice president of research at Haverford Investments, which holds shares of both Pepsi and archrival Coca-Cola Co (KO.N).
Volume in Asia, Middle East and Africa rose 16 percent for snacks and 8 percent for beverages, the company said.
PepsiCo earned $1.60 billion, or 98 cents per share, in the second quarter, its first full quarter owning its largest bottlers. That compared with $1.66 billion, or $1.06 a share, a year earlier and was weighed down by higher interest expense.
Excluding one-time items, earnings per share were $1.09, compared with the analysts’ average view of $1.08, according to Thomson Reuters I/B/E/S.
Revenue rose 40 percent to $14.80 billion, helped by the acquisition of the bottlers. Analysts on average were expecting $14.41 billion.
PepsiCo closed the acquisition of the bottlers in late February, a move meant to cut costs and give it more control over the distribution of its drinks in North America, where sales have been sluggish for some time.
The $7.8 billion purchase gave PepsiCo a head start over Coca-Cola, which expects to close a similar deal in the fourth quarter.
PepsiCo stood by its forecast calling for earnings per share to rise 11 percent to 13 percent this year, excluding currency fluctuations and other one-time items. It said current exchange rates would cut 1 percentage point from the growth rate, in line with prior expectations.
“The fact that Pepsi did not have to reduce expectations for currency is a positive for Coke,” which is scheduled to report earnings on Wednesday, Haverford’s Hoyle said.
In North America, sales by volume fell 3 percent in the Frito-Lay snacks business and declined 1 percent in the beverage business, excluding a gain from a deal with Dr Pepper Snapple Group Inc (DPS.N).
In the company’s Latin American Foods division, volume rose 2 percent.
PepsiCo said it had bought back 39 million shares of its stock in the second quarter.
Reporting by Brad Dorfman and Martinne Geller; Editing by Lisa Von Ahn