PepsiCo Inc reported higher-than-expected quarterly earnings on Wednesday, despite weaker revenue caused in part by the stronger U.S. dollar and the exit of certain businesses.
The maker of Diet Pepsi, Frito-Lay snacks and Tropicana orange juice said third-quarter net income was $1.90 billion, or $1.21 per share, down from $2.00 billion, or $1.25 per share, a year earlier.
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Excluding restructuring and other charges and a gain on commodity hedges, earnings were $1.20 per share. On that basis, analysts on average were expecting $1.16 per share, according to Thomson Reuters I/B/E/S.
Revenue fell 5 percent to $16.65 billion, below analysts' average estimate of $16.90 billion.
Excluding the impacts of currency fluctuations and the refranchising of its bottling businesses in China and Mexico, revenue grew 5 percent, reflecting 1 percentage point of volume growth and 4 percentage points from price increases.
The results come a day after rival Coca-Cola Co also reported weaker-than-expected revenue, hurt by declines in Europe and the Pacific region.
In the third quarter, overall sales volume rose 6 percent in the snack business, after acquisitions lifted sales in Latin America. In North America, volume rose 1 percent at Frito-Lay and 2 percent at Quaker Foods.
PepsiCo's Americas Beverage business saw volume fall 3 percent.
The company also affirmed its full-year outlook, which calls for earnings per share to fall 5 percent from the $4.40 it earned in 2011, and revenue to increase by a low single-digit rate reflecting the changes in China and Mexico.
For PepsiCo, 2012 is a transition year, as it ramps up marketing, cuts thousands of jobs and streamlines its portfolio to improve performance, especially in its North American beverage business.
So far this year, the company has introduced Pepsi Next, a mid-calorie cola, and started a new global marketing campaign for its flagship Pepsi brand.
The company has incurred restructuring charges of $193 million through the third quarter related to its productivity program. It expects additional charges of $205 million in the remainder of 2012, and $129 million from 2013 through 2015.