International sales, salty snacks spur growth at PepsiCo

by Staff
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PURCHASE, N.Y. — In the second quarter ended June 17, net income at PepsiCo grew 14% to $1,358 million, equal to 80c per share on the common stock, compared with $1,194 million, or 70c per share, in the same period last year. Income growth was driven by strong performances in international business and the non-carbonated beverage segment of Pepsi Beverages.

Net revenues for the quarter grew 12% to $5,599 million, compared with net revenue of $7,697 million in the second quarter of last year.

"We’re pleased with our performance for the quarter and for the first half of the year," said Steve Reinemund, chairman and chief executive officer. "Each of our operating divisions contributed to both top- and bottom-line growth and did a fine job of managing through a challenging input cost environment to deliver very solid results."

Frito Lay North America generated 8% revenue growth, led by double-digit growth in Sun Chips and Quaker Chewy granola bars and rice cakes. Tostitos tortilla chips also saw strong single-digit growth and Lay’s and Cheetos experienced low single-digit increases. Doritos sustained a mid-single-digit decrease.

The company recorded double-digit growth in its Smart Spot-eligible products. These products feature a Smart Spot symbol that indicates they meet certain nutritional benchmarks set by the Food and Drug Administration and the National Academy of Sciences.

PepsiCo Beverages North America saw revenue grow 13%, as volume in non-carbonated beverages grew 23%, led by double-digit growth in Gatorade, Aquafina, Lipton ready-to-drink tea, Tropicana juice drinks and Propel fitness water.

Volume in carbonated soft drinks, both regular and diet, fell 1% as slight increases in Mountain Dew and Sierra Mist were unable to negate a decline in Pepsi volume.

PepsiCo International net revenues increased 14% in the quarter, driven by high volume gains. Snacks volume grew 11%, led by high single-digit growth at Sabritas in Mexico, and double-digit growth in Russia, Turkey, Egypt, Australia and India.

Beverage volume grew 10%, led by gains in China, the Middle East, India, Argentina and Thailand. Volume in carbonated soft drinks grew 9%, while non-carbonated soft drinks experienced double-digit volume growth. Acquisitions contributed almost one point to volume growth.

Finally, Quaker Foods North America revenue grew 7%, led by volume growth in Life cereal, Quaker oatmeal and Cap’n Crunch.

The company said it expects earnings per share growth of at least $2.95 for 2006.

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