PepsiCo 2Q profit drops but tops estimates
PURCHASE, N.Y. (AP) — PepsiCo Inc. said Wednesday that its profit fell by 2 percent on restructuring charges in its second quarter, but that sales volume ticked up for its snacks and drinks.
The company, which owns Frito-Lay, Gatorade and Quaker, raised its earnings-per-share outlook for year. It now expects the figure to rise 8 percent from 2013, instead of the 7 percent increase it previously forecast.
Globally, sales volume rose 1 percent for both its snacks and beverages.
In its closely watched North American beverage business, soda volume fell 2 percent while non-carbonated drinks rose 1 percent. On Monday, Coca-Cola also said non-carbonated drinks rose 1 percent, while soda volume was flat. The two companies have been struggling to boost beverage volumes in the region, given the growing competition from smaller players and the shift away from soda that has been underway for years.
In its Frito-Lay North America division, PepsiCo said revenue was up 2 percent on stronger volume. In a phone interview, Chief Financial Officer Hugh Johnston said the company didn’t raise prices on snacks during the period. But he noted that the new Lay’s potato chips flavors that are currently rolling out will be more profitable for the company.
That’s because bags of such special flavors typically have slightly fewer chips in them, even though they cost the same as regular flavors.
“There might be an ounce or two less,” Johnston said.
The new flavors, which include Cappuccino, Mango Salsa and Wasabi Ginger, are part of the company’s annual contest that lets people try to develop a new flavor for the brand.
For the quarter, the Purchase, New York-based company said net income fell to $1.98 billion, or $1.29 per share.
Adjusted for one-time gains and costs, earnings were $1.32 per share, topping the $1.23 analysts expected, according to Zacks Investment Research.
Revenue edged up to $16.89 billion, matching Wall Street forecasts.
PepsiCo shares have increased $6.23, or 7.5 percent, to $89.17 since the beginning of the year, while the Standard & Poor’s 500 index has climbed 7.3 percent. The stock has risen $2.97, or 3.4 percent, in the last 12 months.