PepsiCo net income up 18% on snack sales

PepsiCo Inc, the world’s largest snack-food maker, said profit this year will increase more slowly than it previously projected as commodity costs rise.

Earnings per share in 2011 will grow by a high-single-digit percentage rate, including a two percentage-point benefit from translating overseas profit into dollars, Purchase, New York-based PepsiCo said today in a statement.

PepsiCo said in April that earnings would grow by seven per cent to eight per cent, not including a benefit of as much as two per cent from currency translation.

Chief Executive Officer Indra Nooyi is raising prices on food and beverages to help make up for higher costs for ingredients and plastic packaging. PepsiCo’s total commodity costs may increase $1.4 billion to $1.6 billion this year, from a base of $18 billion, the company said in April.

“Commodity costs are a challenge for all of us in the consumer-products space right now,” Chief Financial Officer Hugh Johnston said today in an interview with Bloomberg Television.

Second-quarter net income rose to $1.89 billion, or $1.17 a share, from $1.6 billion, or 98 cents, a year earlier. Excluding some items, profit was $1.21 a share, matching the average of 14 analysts’ estimates compiled by Bloomberg.

Sales rose 14 per cent to $16.8 billion. Global snack sales volume grew 10 per cent as beverage volume gained 5 per cent. PepsiCo, also the world’s second-largest soft drink maker, fell $1.09, or 1.6 per cent, to $67.4 at 7.19 am in trading before the regular open of the New York Stock Exchange.

Before on Thursday, the shares had gained 4.8 per cent this year, compared with a 4.7 per cent increase for Coca-Cola Co.