Bottler acquisition drives PepsiCo third-quarter profit

by Keith Nunes
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PURCHASE, N.Y. — Gains in its beverage and snack units as well as the acquisition of its two anchor bottlers propelled PepsiCo, Inc.’s net income 11% higher to $1,930 million, equal to $1.19 earnings per share on the common stock, during the third quarter of fiscal 2010.

Sales for the quarter ended Sept. 4 were $15,514 million, a 40% increase compared with the same period during the previous year.

“Even in a macroeconomic environment that continues to be challenging, we believe we have achieved top-tier performance among leading consumer staple companies,” said Indra Nooyi, chairman and chief executive officer. “This reflects our steadfast commitment to managing both the short term and long term, by driving balanced growth across our portfolio while making the right strategic investments.”

The company also announced the creation of the Global Nutrition Group, a new business unit intended to build PepsiCo’s presence in the better-for-you food and beverage category. The new division will be based in Chicago and run by Mehmood Khan, PepsiCo’s chief scientific officer who has been named c.e.o. of the new group.

“The creation of this Global Nutrition Group is part of our long-term strategy to grow our nutrition businesses from about $10 billion in revenues today to $30 billion by 2020,” Ms. Nooyi said. “The market potential is significant, our stable of brands — Quaker, Tropicana, Lebedyansky, Sabra, Alvalle — impressive, and our go-to-market systems powerful. We have been actively ramping up our innovation capabilities and developing strong partnerships with the scientific community, including with universities and research institutions around the world. I believe we are well equipped to deliver authentically nutritious products advantaged by science in an accessible and affordable way to consumers globally.”

Within PepsiCo’s individual business units the most notable performance increase occurred in the Americas Beverages business, where operating profit increased 68% to $1,017 million during the third quarter. Sales within the division increased 118% to $5,792 million. The increases were due to the integration of the recently acquired bottlers.

Within PepsiCo’s Americas Foods division, which includes its Frito-Lay North America, Quaker Foods North America and Latin America Foods business units, operating profit increased 10% during the quarter to $1,271 million. Sales within the division increased 4% during the quarter to $5,193 million.

For the first 36 weeks of fiscal 2010, PepsiCo, Inc.’s net income increased 10% to $4,977 million, equal to $3.06 per share. Sales during the period were $39,683 million, a 33% increase compared with the same period during the previous year when revenues were $29,935 million.

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