PepsiCo Inc, the world's No 2 soft drink company, said on Thursday quarterly profit rose due to tax benefits and strong performances from its key Frito-Lay snack and North American beverage businesses and raised its full-year profit forecast.
The company also said it was closing four plants at Frito-Lay, resulting in 780 job cuts at those locations. About 250 of those jobs will be moved to other Frito-Lay operations.
As a result of the job cuts and $221 million in tax benefits, PepsiCo forecast full year earnings per share of at least $2.35, 6 cents above its previous estimate. It affirmed its 2004 forecast of cash from operating activities of about $4.9 billion.
"The company posted high quality, robust growth in what has proven to be a difficulty retail environment in the US," said Credit Suisse First Boston's Andrew Conway, who reiterated his "outperform" rating on the shares. "The international beverage and snack profit story continues to excel."
PepsiCo shares rose 3 percent to $49.53 in early trading on the New York Stock Exchange. Shares of rival Coca-Cola Co were up 32 cents, or 0.8 percent, at $40.33. Coca-Cola said in mid-September its profit would lag Wall Street forecasts and said there was no quick fix for its problems.
PepsiCo reported earnings of $1.36 billion, or 79 cents a share, including tax benefits of 13 cents a share, for the third quarter ended September 4. This compares to year-earlier profit of $1.01 billion, or 58 cents per share.
Excluding the tax benefits, the company reported earnings of $1.14 billion, or 66 cents per share.
Analysts were expecting the Purchase, New York, company to earn between 64 cents and 66 cents a share, with an average forecast of 65 cents, according to Reuters Estimates. Revenue rose 6 percent to $7.26 billion from $6.83 billion.
Total volume of products sold world-wide rose 4 percent during the quarter, led by growth in the company's international operations.
Volume at Frito-Lay, the company's largest division, rose 2 percent but the unit's operating profit grew 7 percent as a strong performance by its salty snacks overcame higher cooking oil and energy costs.