PepsiCo profit beats on demand for healthy snacks, drinks

PepsiCo Inc reported a better-than-expected quarterly profit, as the company benefited from its cost-cutting programs and higher demand for its healthier beverages and snacks in North America.

The company's shares were up marginally at $107.15 in premarket trading on Wednesday.

PepsiCo and other processed-food companies are investing heavily to develop products to meet the changing tastes of consumers, who are increasingly seeking healthier options.

The company has said it now gets about 45 per cent of its net revenue from "guilt-free" products - beverages that have fewer than 70 calories per 12 ounces and snacks that have lower amounts of salt and saturated fat.

Net revenue in the North America beverages unit, the company's biggest business, rose eight  per cent in the fourth quarter ended Dec 31. Volume sales in the unit rose one per cent.

The company also benefited from lower raw material costs as well as productivity gains from multi-year cost-cutting plans, which include closing plants, simplifying its organisation and management structures and investing in manufacturing automation.

However, net income attributable to PepsiCo fell to $1.40 billion, or 97 cents per share, in the quarter, from $1.72 billion, or $1.17 per share, a year earlier.

The fall in net income was due to pension-related settlements and a debt redemption charge in the latest quarter and a tax benefit in the year-ago period, the company said.

Excluding items, the company earned $1.20 per share.

The company's net revenue rose 5 per cent to $19.52 billion.

Analysts on average had expected earnings of $1.16 per share on revenue of $19.51 billion, according to Thomson Reuters .

PepsiCo also forecast 2017 adjusted earnings of $5.09 per share, missing the average analysts' estimate of $5.16.

The New York-based company said it expected organic revenue to grow at least three per cent, slower than the 3.7 per cent growth in 2016.