Foreign currency fluctuations pushed down PepsiCo Inc.'s second-quarter net income 3 percent, even though revenue soared because of the purchase of its largest bottlers and improving sales of snacks overseas.
The maker of Pepsi and Doritos earned $1.6 billion, or 98 cents per share in the three-month period ending in June. Without foreign currency fluctuations, the company would have earned $1.09 per share. Analysts had expected the company to earn $1.08 per share on revenue of $14.41 billion, according to Thomson Reuters. Analysts typically exclude one-time items from their estimates.
Revenue climbed 40 percent to $14.8 billion.
The company, based in Purchase, N.Y., said has been expanding internationally as sales volume of soft drinks in North America slumps. Americans are spurning soft drinks in favor of juices and teas. But soft drink sales in emerging markets are rising.
Beverage volume in North America rose 13 percent — but excluding a new distribution agreement with Dr Pepper Snapple Group Inc., volume fell 1 percent. The company's Quaker division saw weak sales of cereal, although its Frito-Lay division saw rising sales of its snacks. PepsiCo noted sales improved in convenience stores and gas stations, and to restaurants and other outlets. That's a sign shopper spending may be improving because people cut down on trips to restaurants and shopping in convenience stores during the recession.
In Europe, beverage sales were especially strong in Turkey, Russia, Spain, Germany and Britain. Snack sales also improved.
In China, soft drink sales were sluggish but beverage volume overall grew in the high single digits, led by India, Pakistan and Egypt. Snack volume gained in the double digits in India, the Middle East and China.
PepsiCo benefited from the buyout of its two main North American bottlers, which closed in the first quarter. The deal for Pepsi Bottling Group and PepsiAmericas was valued at $7.8 billion.
The company said it expects to save between $125 million and $150 million this year from combining with the bottlers. It also expects to save about $400 million a year by 2012.
The company continues to expect earnings per share to grow between 11 percent and 13 percent, on a core constant currency basis, in fiscal 2010. In fiscal 2009, the company earned $3.71 per share.
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