updated 2/3/2005 6:39:30 PM ET 2005-02-03T23:39:30

PepsiCo Inc. on Thursday posted an 8 percent rise in fourth-quarter profit as higher volume, a favorable product mix and beneficial foreign-exchange rates helped sales at the soft-drinks and snacks company.

Purchase-based PepsiCo reported net income of $985 million, or 58 cents a share, for the quarter, compared with $914 million, or 52 cents a share, a year earlier.

The latest results included a gain of 5 cents a share on a tax settlement offset by a charge of 6 cents a share to consolidate the manufacturing network at the company’s Frito-Lay North America unit.

Excluding items, PepsiCo’s fourth-quarter earnings were still 58 cents a share, matching the average estimate of analysts polled by Thomson First Call.

Revenue increased 9 percent in the latest quarter to $8.8 billion from $8.07 billion.

Favorable foreign-exchange rates boosted fourth-quarter revenue growth by almost two percentage points, PepsiCo said.

Frito-Lay North American volume grew 3 percent as Lay’s, Cheetos and Tostitos all saw increases in the mid-single digit percentages. Doritos’ growth was slower, in the low single digits.

Volume at PepsiCo’s North American beverages unit rose 2 percent, with 8 percent growth among noncarbonated beverages such as Gatorade.

Carbonated soft drink volumes also increased, helped by “limited-time-only” promotions. Internationally, snack volume rose 6 percent, beverage volume 12 percent.

Volumes were also up at Quaker Foods, but that unit’s operating profit slipped slightly on higher advertising and marketing spending.

PepsiCo expects to earn at least $2.59 a share in 2005, which will be a 53-week financial year. Excluding the extra week, the company forecast earnings of at least $2.55 a share.

Analysts expect the company to report earnings of $2.56 a share for the year. It wasn’t immediately clear whether that number assumed a 52-week or 53-week year.

For 2004, PepsiCo reported net income of $4.21 billion, or $2.44 a share, compared with $3.57 billion, or $2.05 a share, for 2003.

Full-year revenue grew 8 percent to $29.26 billion from $26.97 billion.

Shares of PepsiCo rose 19 cents to close at $54.33 on the New York Stock Exchange.

PepsiCo also said it plans to sell 7.5 million shares of The Pepsi Bottling Group Inc. this year as it moves to reduce its stake in the bottler from about 42 percent to about 35 percent. Pepsi held a 35 percent interest in the Somers, N.Y., bottler before its initial public offering.

PepsiCo, which is the world’s second-largest soft-drink maker after Coca-Cola, also said it is weighing whether to repatriate international profits as part of the American Jobs Creation Act, which offers companies a limited-time tax break. The company believes it could repatriate up to $7.5 billion under the law. PepsiCo’s outlook excludes any amounts it does end up bringing into the United States during the year.

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