April 24 (Bloomberg) -- PepsiCo Inc., the world's second- largest soft-drink maker, said first-quarter profit rose on price increases and higher snack sales in Russia and China.

Net income increased 4.7 percent to $1.15 billion, or 70 cents a share, meeting analysts' average estimate. Sales gained 13 percent to $8.33 billion, the Purchase, New York-based company said in a statement. PepsiCo reaffirmed its per-share earnings forecast of $3.72 for 2008.

PepsiCo plans to boost prices further through the third quarter to counter rising costs for wheat, cooking oil and fuel, international chief Mike White said today. Outside North and South America, the company increased sales of snacks by 11 percent, led by Russia and China, and beverages by 15 percent after spending more to promote Lay's chips and Pepsi-Cola.

``Pepsi has handled the tough raw material environment very well,'' Chris Meeker, who manages $580 million in assets including PepsiCo stock for Farr Miller & Washington LLC in Washington, said in a telephone interview. ``Pepsi International continues to carry the day.''

PepsiCo said its commodity costs may rise as much as 10 percent in 2008, up from an earlier forecast of 6 percent.

`Weak' Drink Sales

Analysts including Judy Hong of Goldman, Sachs & Co. said ``weak'' drink sales in North America were cause for concern.

The amount of non-carbonated beverages sold in the U.S. and Canada was unchanged, PepsiCo said. The volume of juices and bottled water sold fell by a ``mid-single digit'' on a percentage basis. Sales of Gatorade sports drinks, including recently introduced low-calorie G2, rose 6 percent, less than some analysts had estimated.

``We had expected the hydration innovation to drive improved top- and bottom-line results in this division, but this did not appear to materialize,'' Hong said in a research note.

PepsiCo declined $1.19, or 1.7 percent, to $68 at 4:15 p.m. in New York Stock Exchange composite trading, the most since Feb. 29. The stock has fallen 10 percent this year, compared with 1.8 percent for Coca-Cola Co., the world's largest soft- drink maker.

Sobe Life Water

PepsiCo Chief Financial Officer Richard Goodman said the ``softening'' in the plain bottled water market is partly because of growth in flavored water or products such as Sobe Life Water that include vitamins and other ingredients.

``I think, on enhanced waters, which is sort of the value- added piece of it, that our business is doing well,'' Goodman said in a telephone interview today.

The average per-share profit estimate of 13 analysts in a Bloomberg survey was 70 cents.

First-quarter net income was $1.1 billion, or 65 cents a share, a year earlier. Operating profit rose 9.4 percent, with the decline in the U.S. dollar accounting for about a third of the gain, PepsiCo said.

Goldman Sachs Group Inc. said April 14 that the U.S. corporate earnings season has gotten off to an ``awful start'' as cash-strapped U.S. consumers grapple with higher energy costs and lower home values. The firm expects ``generally disappointing results'' that will drive the Standard & Poor's 500 Index lower.

PepsiCo is scheduled to hold its annual meeting May 7 at 9 a.m. in Plano, Texas.

To contact the reporter on this story: Duane D. Stanford in Atlanta dstanford2@bloomberg.net.

Last Updated: April 24, 2008 16:22 EDT