PepsiCo Inc (PEP) reported higher-than-expected quarterly earnings on Wednesday, as price increases and productivity improvements helped margins.
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The results, which stand in contrast to a disappointing quarter from Coca-Cola (KO), come a week after activist shareholder Nelson Peltz said publicly that PepsiCo should buy Oreo cookie maker Mondelez International (MDLZ) and split off its soft-drink business.
Despite the beat, the maker of Pepsi-Cola, Frito-Lay snacks and Tropicana juice stood by its outlook for 2013, which calls for earnings growth of 7 percent.
Net income was $2.01 billion, or $1.28 per share in PepsiCo's second quarter, up from $1.49 billion, or 94 cents per share a year earlier.
Excluding items such as restructuring and integration charges, earnings were $1.31 per share. On that basis, analysts on average were expecting $1.19 per share, according to Thomson Reuters I/B/E/S.
Net revenue rose 2 percent to $16.81 billion, topping analysts' estimate of $16.79 billion.
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Sales volume rose 3 percent for the food business and 1.5 percent for the beverage business. Volume tracks the amount of product sold.
On the food side, volume in the Americas rose 2 percent. In Latin America, it gained 1 percent, while in North America, it rose 3 percent for Frito-Lay and 1 percent for Quaker Foods. Snack volume increased 3 percent in Europe and 6 percent in the Asia, Middle East and Africa segment.
On the more challenged drinks side, volume in the Americas fell 3.5 percent, was flat in Europe and rose 9 percent in Asia, the Middle East and Africa.
Like Coca-Cola, PepsiCo's drinks business was hurt by an unusually cool and wet spring, Chief Financial Officer Hugh Johnston told CNBC television. But the company's broad portfolio played a role in its strong performance, he said, and dismissed Peltz's notion that the company should buy Mondelez.
"We think PepsiCo as a portfolio is working so well right now and the complexity of taking on an $80 billion acquisition and somehow trying to do all that integration, frankly, will distract the business from doing what it is that we're doing right now, which is creating a lot of value for shareholders," Johnston said.
He added that when someone advocates for the deal, "more often than not it's someone who's got a bigger stake in Mondelez."
PepsiCo shares rose 80 cents, or 0.9 percent, to $87 in premarket trading. They are up 26 percent so far this year.