Higher prices, healthier snacks drive PepsiCo profit beat
By Sruthi Ramakrishnan
(Reuters) - PepsiCo Inc's (NYSE: PEP) second-quarter profit topped estimates, as the company sold more higher-margin healthier foods such as baked chips and raised prices on its drinks in North America.
Revenue from the company's North American Frito-Lay business, under which it sells snacks such as Lay's chips, rose 3 percent in the quarter ended June 17. Sales volumes rose 1 percent and net pricing climbed 3 percent.
Demand for snacks was boosted by the launch of premium products such as Lay's Poppables - chips that have relatively less sugar content. Poppables cost more as well: a 5-ounce pack sells for $2.48 on Walmart.com versus a 10-ounce pack of Lay's Classic chips that sells for $2.50.
PepsiCo isn't the only company promoting foods perceived as healthier than its traditional products.
Rival Coca-Cola Co (NYSE: KO) and other companies such as Nestle SA
PepsiCo shares, however, fell nearly 1 percent to $113.19, in sync with broader market.
The company said on Tuesday that North America beverage sales rose 2 percent in the quarter. While volume sales were flat, net pricing rose 1 percent.
PepsiCo and Coke have for the past few years focused on selling smaller soda servings such as 7.5 ounce cans in developed markets to cope with falling demand for bigger-sized bottles.
The smaller servings can cost more than twice as much per ounce.
PepsiCo earned $1.44 per share, excluding one-time items and a 6 cents per share gain on an asset sale, beating the average analyst estimate of $1.40, according to Thomson Reuters I/B/E/S.
Revenue rose 2.1 percent to $15.71 billion, beating the $15.60 billion expected by analysts.
The company raised its adjusted profit forecast for 2017 to $5.13 per share from $5.09, citing lower impact from unfavorable foreign exchange.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Martina D'Couto and Sayantani Ghosh)