PepsiCo raised its earnings forecast for the year as the snack-and-beverage giant reported a surprise increase in core profit, boosted by lower raw-material costs, despite sliding revenue.
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The maker of Pepsi-Cola, Cheetos and Gatorade now expects core earnings this year of $4.78 a share, up from its prior projection of $4.71 and ahead of Wall Street's projection of $4.76, according to a Thomson Reuters poll of analyst estimates.
PepsiCo has increasingly relied on growth from its home market amid turmoil overseas. North American beverage and Frito-Lay businesses, its two largest top-line contributors, posted volume and revenue growth. Operating results in both divisions were helped by increased productivity and lower raw-material costs. Meanwhile, the company's Latin America, as well as its Europe and sub-Saharan Africa businesses reported revenue declines, which it blamed at least in part on foreign exchange. Revenue in the Asia, Middle East and North Africa division was essentially flat with revenue from last year, hurt by foreign exchange.
Over all, PepsiCo posted a profit of $1.99 billion, or $1.37 a share, up from $533 million, or 36 cents a share, a year earlier. The year-ago quarter was hurt by a $1.36 billion impairment charge related to its Venezuelan deconsolidation. Excluding certain items, such as mark-to-market effects, PepsiCo reported core earnings of $1.40 a share, up from $1.35 a year ago.
Analysts had projected earnings of $1.32 a share.
Revenue declined 1.9% to $16.03 billion. Analysts had projected $15.83 billion in revenue.
PepsiCo continued to face weakening foreign currencies and the impact from the deconsolidation of its Venezuelan business, which each shaved 3 percentage points off the top line. Excluding such effects, the company said its total revenue grew 4% on an organic basis.
Shares rose 2.6% to $110.20 in recent premarket trading.
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