PepsiCo reported a bigger-than-expected rise in quarterly profit Wednesday, as the food and beverage maker benefited from strong international demand, acquisitions and the weak U.S. dollar.
The maker of Pepsi-Cola, Frito-Lay snacks and Quaker Oatmeal also affirmed its full-year earnings outlook and raised its target for share buybacks.
PepsiCo said net income rose 9 percent to $1.7 billion, or $1.05 per share, in the second quarter that ended June 14, from $1.56 billion, or 94 cents per share, a year earlier.
Excluding gains in the value of the company's commodity hedging positions, earnings were $1.03 per share.
Analysts on average were expecting $1.02 per share, according to Reuters Estimates.
Net revenue rose 14 percent to $10.95 billion.
Since PepsiCo makes a wide range of products and does business in many countries, it has had an easier time offsetting the industrywide pressures of soaring commodity costs and a U.S. economic slowdown.
The company, based in the New York City suburb of Purchase, said foreign exchange rates contributed 4 percentage points to revenue growth and 3 points to profit growth.
Acquisitions added 3 points to revenue growth and 1 point to profit growth.
The weakness of the U.S. dollar against many other currencies increases the value of overseas sales when they are converted to dollars for inclusion in companies' income statements.
Company-wide sales by volume rose 5 percent, despite a 1 percent decline in the Americas beverage business, as cash-strapped U.S. consumers cut back on buying drinks at convenience stores and gas stations.
Beverage volume fell 3 percent in North America, with carbonated drinks such as Pepsi-Cola, Mountain Dew and Sierra Mist falling 2 percent, and noncarbonated drinks such as Aquafina water, Gatorade sports drink and Tropicana juice falling 4 percent, due to a double-digit decline in unflavored bottled water.
Chief Financial Officer Richard Goodman said in an interview that consumers were probably drinking more tap water in an effort to save money.
Volume rose 2 percent in the Americas foods business, 10 percent in the international snacks business and 13 percent in the international drinks business.
The company said it intends to buy back at least $5.3 billion of its shares this year, which is $1 billion more than it had previously said it would spend.
PepsiCo also affirmed its 2008 sales volume and earnings outlook, saying it still expects volume to rise 3 percent to 5 percent and earnings per share of at least $3.72.
The company raised its revenue outlook, due to acquisitions and foreign exchange rates.
PepsiCo said it now expects net revenue growth at a low double-digit percentage rate.
In April it forecast revenue growth at a high single-digit rate.