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PepsiCo Profit Tops Analysts’ Estimates Amid Price Increases

PepsiCo Profit Tops Analysts’ Estimates Amid Price Increases
PepsiCo Inc., the world’s largest snack-food maker, reported third-quarter profit that topped analysts’ estimates amid price increases and higher beverage volume sales. Photographer: Daniel Acker/Bloomberg

Oct. 17 (Bloomberg) -- PepsiCo Inc., the world’s largest snack-food maker, reported third-quarter profit that topped analysts’ estimates as it boosted prices.

Net income fell 5 percent to $1.9 billion, or $1.21 a share, from $2 billion, or $1.25, a year earlier, Purchase, New York-based PepsiCo said today in a statement. Profit excluding some items was $1.20 a share. That exceeded the $1.16 average of 14 analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Indra Nooyi has increased marketing spending in a bid to boost PepsiCo’s beverage sales in the Americas and raise snack profits. Global drink sales volumes, excluding the effects of acquisitions, divestitures and foreign-currency fluctuations, grew 1 percent as snack volume jumped 3 percent. Pricing jumped 4 percent, PepsiCo said.

PepsiCo “is a work in progress, and we think this shows movement towards more stable results,” John Faucher, an analyst with JPMorgan Chase & Co in New York, said today in a note. He rates the shares overweight, the equivalent of a buy.

PepsiCo, also the world’s second-largest soft-drink maker, fell 0.3 percent to $70.10 at the close in New York. The shares gained 5.7 percent this year.

Third-quarter sales fell 5.3 percent to $16.7 billion. PepsiCo’s Americas beverages unit raised pricing 3 percent in the quarter, helping offset a 3 percent decline in bottler case volume. At convenience and gas stations, pricing and volume sales also increased.

Annual Forecast

“I expect to see, with our balanced portfolio, continued growth in our core beverage business,” Chief Financial Officer Hugh Johnston said today in an interview on Bloomberg television.

The company reiterated its forecast that earnings per share, excluding certain costs and foreign-currency effects, would decline 5 percent this year.

In the current quarter, the North American beverage unit is “off to a good start and we expect the business to be positive,” Nooyi said during a conference call today.

Yesterday, Coca-Cola Co., the world’s largest soft-drink maker, reported a 3.9 percent increase in third-quarter profit as sales volumes in Europe improved.

Net income rose to $2.31 billion, or 50 cents a share, from $2.22 billion, or about 48 cents, the Atlanta-based company said. Revenue advanced less than 1 percent to $12.3 billion, trailing the $12.4 billion average of analysts’ estimates compiled by Bloomberg.

Coca-Cola’s global volume sales rose 4 percent, helped by a 2 percent boost in North America. Excluding some items, profit was 51 cents a share, matching the average of 14 analysts’ estimates compiled by Bloomberg.

(PepsiCo executives discussed results on a conference call at today. To listen, visit LIVE <GO>.)

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

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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