Pepsi, Buoyed by Domestic Growth, Boosts Its Outlook

PepsiCo's second-quarter results beat expectations and the snack-and-beverage giant raised its outlook, as it continued to rely on domestic growth to drive results.

The maker of Pepsi-Cola, Cheetos and Gatorade boosted its forecast for core earnings for the year, now expecting $4.71 a share, up from $4.66 previously.

Shares rose 2.2% to $108.20 in premarket trading.

In all, the company reported a profit of $2.01 billion, or $1.38 a share, up from $1.98 billion, or $1.33, a year earlier. Excluding certain items, PepsiCo reported core earnings of $1.35 a share. Revenue declined 3.3% to $15.4 billion.

Analysts projected earnings of $1.30 a share on $15.37 billion in revenue, according to Thomson Reuters.

PepsiCo continued to face weakening foreign currencies, which shaved 4 percentage points off the top line, and the deconsolidation of the company's Venezuelan business took off 2.5 percentage points.

Organic revenue grew 3.3%.

The company reported that its core gross margin expanded by 115 basis points, helped by revenue and productivity initiatives that were partially offset by an increase in advertising and marketing expenses as a percentage of sales.

PepsiCo increasingly is relying on growth from its home market amid turmoil overseas. All of the company's North American business units, which include beverages, Frito-Lay and Quaker Foods, posted revenue growth while its foreign segments all declined.

Volume in PepsiCo's North America Beverages unit fell, cutting revenue in that segment by 1 percentage point, while pricing increases boosted revenue in the segment by 2 percentage points.

Last week, after plummeting sales and complaints from the Diet Pepsi devotees, the company said it will bring back Diet Pepsi with aspartame in September. The changes was announced less than a year after launching its new Diet Pepsi with sucralose.

Write to Austen Hufford at