PepsiCo’s profit rises on snack sales

PEPSICO has reported a stronger-than-expected first-quarter profit as the company slashed costs and sold more snacks around the world.logo

The company, which makes Frito-Lay, Gatorade, Mountain Dew and Tropicana, said global snack volume rose two per cent in the period.

Global beverage volume was even from a year ago, including in its closely watched North American drinks unit.

Coca-Cola also reported flat volume in the North America market earlier this week.

Both companies have been offsetting ongoing declines in their flagship soda businesses by relying more heavily on other beverages, such as sports drinks, juices and bottled waters.

Even though beverage volume was flat in North America, PepsiCo managed to push up revenue, partly by introducing pricier new drinks such as Mountain Dew Kickstart, which is positioned as an energy drink for younger men.

Chief Financial Officer Hugh Johnston noted that a can of Kickstart costs $US1.99 ($A2.13), versus $US3.50 for a 12-pack of Mountain Dew.

He also noted that the company’s stepped-up marketing has strengthened the company’s brands, which in turn had allowed PepsiCo to charge higher prices.

The company planned to raise prices this year between two and three per cent in both snacks and drinks, he said.

For the quarter, the company earned $US1.22 billion, or 79 cents per share.

Not including one-time items, it earned 83 cents per share, above the 75 cents per share Wall Street expected.

A year ago, it earned $US1.08 billion, or 69 cents per share.

Revenue edged up to $US12.62 billion, higher than the $US12.39 billion analysts expected.

PepsiCo, based in New York, stood by its outlook for the year. It expects adjusted earnings per share to grow by seven per cent.

Shares rose two per cent to $US86.60 in premarket trading.

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