NEW YORK: PepsiCo Inc reported a higher-than-expected quarterly profit on Wednesday, helped by price increases, and stood by its full-year outlook.
That the maker of Diet Pepsi, Frito-Lay snacks and Tropicana orange juice did not cut its outlook was viewed as a sign of strength at a time when many consumer products companies are suffering from a weak global economy.
"In a consumer group seeing negative second-half revisions, we consider this positive," said Stifel Nicolaus analyst Mark Swartzberg. PepsiCo shares rose about 1 percent in morning trading.
PepsiCo said second-quarter net income had fallen to $1.49 billion, or 94 cents per share, from $1.89 billion, or $1.17 per share, a year earlier.
Excluding items, earnings were $1.12 per share, topping the analysts' average estimate of $1.09, according to Thomson Reuters I/B/E/S.
Revenue fell 2 percent to $16.5 billion, in line with Wall Street estimates.
The decline resulted in part from a loss of revenue in China and Mexico after the company sold the bottling operations in those countries to franchisees. The stronger US dollar, which reduces the value of overseas revenue, also cut into sales.
Excluding those items, organic revenue rose 5 percent, with contributions of 1 percentage point from volume and 4 percentage points from price increases.
Volume rose 6 percent in the snack business and 1 percent in the beverage business. In the Americas, volume rose 5 percent in snacks and fell 1 percent in beverages. In Europe, volume rose 1 percent in snacks and fell 2 percent in beverages.
The company affirmed its 2012 outlook, which calls for earnings per share to fall 5 percent from the $4.40 it earned in 2011. It expects revenue to grow by a mid-single-digit percentage rate, excluding the reduction from refranchising its businesses in China and Mexico.
PepsiCo said it still expected foreign exchange rates to hurt earnings-per-share growth by 3 percentage points.
The recent spike in corn prices resulting from the US drought should not have an impact on the company in the near-term, Chief Financial Officer Hugh Johnston said, given the company's forward-buying strategy. He also said that corn was only one of many ingredients the company purchases.
For the company, 2012 is a transition year as it ramps up marketing, cuts thousands of jobs and streamlines its portfolio to improve performance, especially in its North American beverage business.
So far this year, PepsiCo has introduced Pepsi Next, a mid-calorie cola, and started a new global marketing campaign for its flagship Pepsi brand.
Wall Street seems to have warmed to the turnaround plan, with PepsiCo shares up 7 percent since Feb. 9 when the plan was announced.
Its shares were up 70 cents, or 1.03 percent, at $69.50 on the New York Stock Exchange in morning trading.
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