July 23 (Bloomberg) -- PepsiCo Inc., the world's largest snack maker, said second-quarter profit rose 9.1 percent after it boosted prices for potato chips and streamlined delivery routes.

Net income increased to $1.70 billion, or $1.05 a share, in the three months ended June 14, exceeding analysts' average estimate by 4 cents. Sales jumped 14 percent to $10.9 billion, Purchase, New York-based PepsiCo said today.

Sales of Cheetos, Ruffles and SunChips gained even as Chief Executive Officer Indra Nooyi raised prices to counter a 10 percent increase in commodity costs this year. The company, the world's second-biggest soda maker, benefited from its 60 percent snack-market share as cash-strapped U.S. consumers added chips to meals at home instead of eating out.

``I was a little surprised they were able to beat in this commodity environment,'' Walter Todd, a principal at Greenwood Capital Associates LLC in Greenwood, South Carolina, said today in an interview. ``It looks like margins held up OK despite the cost pressures.'' Greenwood manages $800 million of assets including PepsiCo shares.

Price Increases

The company, which has no plan to raise prices further in 2008, will consider increases for 2009 at the end of this year, Chief Financial Officer Richard Goodman said in a telephone interview.

The average per-share profit estimate of 11 analysts in a Bloomberg survey was $1.01. Nine analysts estimated sales of $10.6 billion.

Profit was $1.56 billion, or 94 cents a share, in the second quarter a year earlier.

The amount of snacks sold by PepsiCo Americas Foods, which includes Frito-Lay North America, Quaker Foods North America, and Latin America Foods, grew 2 percent. The amount of drinks sold by PepsiCo Americas Beverages, which produces Pepsi Cola and Mountain Dew, fell 1 percent.

Volume sales of snacks in the rest of the world, which make up about three-fifths of PepsiCo International's revenue, jumped 10 percent, while beverage sales grew 13 percent, PepsiCo said.

Profit Forecast

PepsiCo reaffirmed its 2008 per-share earnings forecast of at least $3.72. The company will repurchase $5.3 billion of its shares this year, $1 billion more than it previously forecast. The soda maker bought back $2.9 billion of the shares in the first half.

PepsiCo rose $1.53, or 2.3 percent, to $67.72 at 4 p.m. in New York Stock Exchange composite trading. The stock has declined 11 percent this year, compared with 14 percent for Coca-Cola Co., the world's largest soft-drink maker.

PepsiCo said in June it reduced costs by rerouting delivery trucks to save fuel, speeding up automation of its production plants and cutting office expenses. North America accounted for about 60 percent of revenue in 2007.

Growth in sales of Cheetos and Ruffles chips in North America and Sabritas brand chips in Latin America helped boost profit, the company said.

The company's divisions in Latin America and Europe posted revenue and operating-profit growth in the quarter.

``PepsiCo International growth, especially in eastern Europe and Asia, will be a long-term contributor to Pepsi's long-term double-digit growth rate,'' Carlos Laboy, an analyst at Credit Suisse Holdings USA, said in a July 14 note.

Cheetos, Cracker Jack

PepsiCo gets three-fifths of its revenue from snack sales by Frito-Lay North America, Quaker Foods North America and international units. Brands include Cheetos, Tostitos, Funyuns, Cracker Jack and Rold Gold pretzels.

Costs for ingredients, packaging and energy jumped after crude-oil prices almost doubled, and corn prices climbed by more than half as of June.

As costs rose, Frito-Lay raised prices by an average 4 percent per pound in the first quarter, mostly by taking chips out of the bag. It wasn't enough to protect PepsiCo's operating margin, which narrowed almost 1 percentage point. Nooyi responded by raising the retail cost of PepsiCo's largest chip bags starting April 20.

Frito-Lay's price increases will reach a ``high single- digit'' percentage for the year, Goodman said in April. PepsiCo said it raised prices overseas as well, keeping increases in emerging markets close to inflation.

The company said it has negotiated advance purchases to counter further commodity cost gains through the end of 2008 and is working on hedges for 2009.

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

Last Updated: July 23, 2008 16:08 EDT