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PepsiCo's quarterly profit beats on higher pricing

Key Points
  • PepsiCo's profit rose, helped by higher sales in its Frito-Lay North America business and the sale of its minority stake in British bottler Britvic.
  • Revenue in PepsiCo's North America beverage business rose 2 percent to $5.24 billion in the quarter ended June 17.
  • Volume sales were flat, the company said on Tuesday.
Bottles of Pepsi-Cola on sale in San Francisco.
Getty Images

PepsiCo quarterly profit beat estimates as higher pricing of sodas and snack foods in North America paid off and as the company sold its minority stake in British bottler Britvic.

PepsiCo said on Tuesday that sales in its North America beverage unit, the company's largest, rose 2 percent to $5.24 billion in the second quarter ended June 17. While volume sales were flat, net pricing was up 1 percent.

PepsiCo and rival Coca-Cola have focused on selling smaller, higher-margin packs in developed markets while pulling back on promoting large discount packs as they look to cushion the impact of falling demand for fizzy drinks.

Revenue from PepsiCo's Frito-Lay North America business rose 3 percent, helped by a 1 percent rise in volume and a 3 percent rise in net pricing.

The company said in May it would sell its 4.5 percent stake in British bottler Britvic for an undisclosed amount.

Net income attributable to PepsiCo rose to $2.11 billion, or $1.46 per share, from $2.01 billion, or $1.38 per share, a year earlier.

Excluding items, the company earned $1.44 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 2.1 percent to $15.71 billion.

Analysts on average had expected earnings of $1.40 per share on revenue of $15.60 billion, according to Thomson Reuters I/B/E/S.

However, gross margins fell 50 basis points in the quarter, compared with a 115 basis points expansion in the year-earlier quarter.

The company had said in April it expected margins to remain under pressure in the second quarter as it passes on higher commodity prices to consumers.

PepsiCo raised its adjusted profit forecast for 2017 to $5.13 per share from $5.09, citing lower impact from unfavorable foreign exchange.

PepsiCo's shares were little changed in premarket trading on Tuesday.

CORRECTION: This story has been updated to show an adjusted profit of $1.44 per share.