updated 10/12/2006 10:08:41 AM ET 2006-10-12T14:08:41

PepsiCo Inc., the snack food maker and No. 2 soft drink company, said Thursday its third-quarter profit jumped 71 percent, reflecting a 9.4 percent increase in sales and comparison with results that were depressed by a tax charge a year ago.

The company raised its earnings guidance for the full year, saying it expects a profit of at least $2.98 per share, up from its previous estimate of $2.95 a share. But the latest forecast is a penny below Wall Street estimates.

Profit for the quarter ended Sept. 9 grew to $1.48 billion, or 88 cents per share, from $864 million, or 51 cents per share, during the same period last year.

Revenue rose to $8.95 billion from $8.18 billion last year.

Analysts, on average, predicted a profit of 86 cents per share on revenue of just less than $8.8 billion.

“PepsiCo reported strong, high quality earnings once again and therefore we expect the momentum in the stock to continue,” Citigroup analyst Bonnie Herzog wrote in a research note.

Purchase, N.Y.-based PepsiCo makes snacks through its Frito-Lay division while its Pepsi-Cola division is the nation’s second biggest behind The Coca-Cola Co.

Revenue grew in the Frito-Lay, Pepsi-Cola, PepsiCo International and Quaker Foods divisions.

Non-carbonated beverages, such as Aquafina water, Gatorade and Lipton ready-to-drink teas, posted 13 percent volume growth in North America, while carbonated soft drinks, including its flagship brand Pepsi, fell 2 percent.

Consumer health-consciousness has contributed to rapid growth in non-cola beverages. To build on sales of bottled water and other non-carbonated drinks, the company recently bought Izze Beverage Co., maker of sparkling juice drinks. In July, PepsiCo said it partnered with Ocean Spray Cranberries Inc. to co-develop new products.

Frito-Lay’s revenue in North America grew 7 percent, helped by double-digit gains in sales of Tostitos, SunChips and Quaker snacks. Doritos had low single-digit growth, the company said.

The quarterly earnings announcement is the first released with new chief executive Indra Nooyi in charge. Nooyi moved up from being chief financial officer to replace Steve Reinemund on Oct. 1.

“We are very confident in our outlook for the balance of the year as all our businesses are performing well,” Nooyi said in a statement. She said the international division performed particularly well this quarter. Its revenue grew 16 percent.

Analyst William Pecoriello of Morgan Stanley called the revenue growth across divisions impressive.

“The 2007 outlook is bright given the strength of the snack and beverage innovation pipelines,” he wrote.

Pecoriello said there may be some concern over underlying growth of the international division, which had organic growth of 12 percent compared to the 20 percent in recent quarters. Organic growth excludes contributions from operations acquired since a year earlier.

The tax charge a year ago was due to a repatriation of $7.5 billion of international earnings under the 2004 American Jobs Creation Act, which allows companies to repatriate overseas profit at significantly reduced tax rates.

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