April 25 (Bloomberg) -- PepsiCo Inc., the world's second- largest soda maker, said first-quarter profit rose 16 percent, exceeding analysts' estimates on demand for soft drinks in Russia and Brazil and sales of Frito-Lay chips.

Chief Executive Officer Indra Nooyi also said the company is considering acquisitions as small as $5 million and as much as a ``couple billion'' to add new snacks and drinks.

Net income increased to $1.1 billion, or 65 cents a share, from $947 million, or 56 cents a year earlier, PepsiCo said today in a statement. The earnings were 4 cents higher than analysts anticipated.

Profit outside the U.S. jumped 29 percent as the company promoted Pepsi soda and crab-flavored Lay's in Europe and Latin America. PepsiCo introduced Flat Earth chips made with fruits and vegetables, and switched to a lower-fat oil for Lay's potato chips to attract health-conscious consumers.

``They're incorporating healthier snacks and more local flavors, and people are responding,'' said Bill Schultz, who oversees $750 million for McQueen Ball & Associates in Bethlehem, Pennsylvania.

The average estimate of 11 analysts surveyed by Bloomberg was 61 cents a share. Sales gained 9.4 percent to $7.35 billion, beating estimates of $7.25 billion.

Shares of Purchase, New York-based PepsiCo rose 57 cents to $66.98 at 4 p.m. in New York Stock Exchange composite trading. They climbed 16 percent in past year, compared with a 25 percent gain by Coca-Cola, the world's largest soft-drink company.

`Rich Pipeline'

PepsiCo has a ``rich acquisition pipeline'' of potential purchases, Nooyi said today on a conference call with investors and analysts.

She said PepsiCo is likely to sign more agreements this year than in previous years, when it would consider 15 or 20 acquisitions and complete just one or two.

PepsiCo would consider companies ranging from $5 million in sales to ``a couple billion,'' she said. Larger deals would exceed the $500 million per year Nooyi said she planned to spend on acquisitions during an analyst meeting in October.

PepsiCo in January bought Naked Juice Co. for an unspecified amount, giving it juice and protein shakes to compete with Coca-Cola's Odwalla brand. Last year the company bought Izze Beverage Co. for its sparkling juice drinks, and it purchased Stacy's Pita Chips in 2005.

PepsiCo reaffirmed its full-year forecast for earnings per share of ``at least $3.30.'' Analysts were estimating $3.33.

Lower Taxes

The company adjusted its year-ago earnings because the company's overseas units started reporting monthly to align with the rest of the company. That reduced previously reported first- quarter profit by 4 cents a share.

Profit in the first quarter was helped by a lower tax rate and reduced corporate expenses, which together added about 4 cents to profit, Morgan Stanley analyst Bill Pecoriello said today in a research note. PepsiCo's selling, general and administrative costs narrowed to 35.85 percent of sales from 36.75 percent a year earlier.

PepsiCo posted a 13 percent jump in snacks volume overseas, the most in a year, on demand for Gamesa chips in Mexico and lentil- and crab-flavored chips in Russia, Turkey and India. Beverage case sales rose 7 percent abroad after the company promoted sodas including Pepsi, Mirinda and Mountain Dew in Brazil and Argentina.

Frito-Lay sales rose 3.5 percent, the biggest gain in three quarters, on demand for Lay's and Ruffles potato chips. Those snacks are now cooked with sunflower oil that has half the saturated fat as cottonseed oil they were previously cooked with.

Aquafina, Lipton

North America soda case sales dropped by 3 percent, the worst performance for carbonated drinks in at least two years, as consumers cut back on sugary soft drinks. Noncarbonated drinks such as Aquafina and Lipton tea rose by 8 percent, helping mute the drop in soda.

The company said Gatorade had a ``low single-digit'' volume gain, reversing a decline in the sports drink during the fourth- quarter. About 27 percent of revenue comes from beverage sales in North America.

``North America beverages is a drag, and has been for a while, which is why they're pushing into international markets so much,'' said Walter Todd, who helps manage $850 million including PepsiCo shares at Greenwood Capital Associates LLC in South Carolina.

``They're making investments in the right places, in tea and buying healthier drinks,'' he said.

Pepsi Bottling Group Inc., the company's largest bottler, said yesterday that new raspberry and apple-flavored versions of Lipton tea will be introduced this year, and vitamin-enhanced Aquafina Alive and Dole Sparklers juice drinks were recently added.

Nooyi, who has been with PepsiCo since 1994, will become chairman of the company in May when Steve Reinemund retires.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

Last Updated: April 25, 2007 18:48 EDT