PepsiCo profit beats estimates on stronger Frito-Lay demand
By Anjali Athavaley and Shailaja Sharma
(Reuters) - PepsiCo Inc reported better-than-expected first-quarter profit, helped by stronger demand for its Frito-Lay snacks in North America and price increases in its beverage business.
Revenue in the Frito-Lay business rose 3.1 percent to $3.32 billion partly on new product launches like Cheetos Sweetos, a sweet version of the salty snack, and Rold Gold Pretzel Dippers.
Beverage revenue, which has been hurt by a long-term decline in U.S. soft drink sales, rose marginally to $4.43 billion due to a 3 percent increase in overall prices.
"The Americas did terrifically well," Chief Financial Officer Hugh Johnston said in an interview. "Frito-Lay picked up from a volume perspective."
Demand was weak in Europe, where the company raised prices as a result of currency impacts, he added.
PepsiCo's net revenue fell 3.2 percent to $12.22 billion in the quarter, for the first time in four quarters. The cited a stronger dollar, adding that revenue rose 4.4 percent, excluding results from mergers, acquisitions or takeovers.
At least 30 percent of revenue comes from outside North America.
Rival Coca-Cola Co reported a rise in revenue for the first time in nine quarters on Wednesday, helped by a 6 percent increase in North America, its biggest market.
The dollar, which has surged about 8.5 percent against a basket of major currencies this year, will hurt 2015 revenue by about 10 percentage points and earnings by about 11 points, PepsiCo said.
The company had said a strong dollar was expected to cut full-year revenue and earnings by about 7 percentage points. On a conference call with analysts, Johnston said the company was more aggressively sourcing materials locally to limit the impact from currency.
"The shares are likely to see some modest pressure today given the more onerous [foreign exchange] drag," said Jefferies analyst Kevin Grundy in a note.
PepsiCo stock fell 1.6 percent to $95.72.
Net income attributable to PepsiCo was little changed at $1.22 billion, but earnings rose to 81 cents per share from 79 cents.
Excluding items, PepsiCo earned 83 cents per share, while analysts expected 79 cents on revenue of $12.18 billion, according to Thomson Reuters I/B/E/S.
PepsiCo has exceeded Wall Street's profit estimates for 13 straight quarters including the latest quarter.
(Reporting by Shailaja Sharma in Bengaluru and Anjali Athavaley in New York; Editing by Don Sebastian and Jeffrey Benkoe)
