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Frito-Lay unit sales power PepsiCo's profit, revenue beat


(Reuters) - Inc topped quarterly profit and revenue estimates on Tuesday as the company's strategy to offer more healthier beverages and focus on its snacks paid off.

Sales at Frito-Lays snacks division continued to grow, rising for the second straight quarter, while its soda in the second quarter posted its smallest sales drop in a year.

This comes months after Indra Nooyi's decided to go "toe-to-toe" with bigger rival by spending more on marketing its trademark colas.

Pepsi's beverages unit that makes has been struggling to reverse a four-quarter decline in sales as consumer taste shifts to low-calorie and low-sugar alternatives.

To stem the slide, the company has been boosting its portfolio of healthier options to sodas by offering products such as Bubly, a flavored sparkling water and Gatorade Zero, a

"The majority of our businesses performed very well, particularly our international divisions propelled by continued growth in developing and emerging markets," Nooyi said in a statement.

"Our Beverages sector posted sequential net revenue and operating profit performance improvement."

Sales in its beverage unit fell about 1 percent to $5.19 billion in the quarter, but narrowly beat market expectations.

"We've been encouraged by PEP's early success with Bubly," wrote in a pre-earnings note, adding that Bubly now commands a 4.4 percent share in sparkling water despite only being on the market for a few months.

Shares of rose 2 percent to $110 in premarket trading after it reaffirmed its 2018 profit forecast. The company's stock has declined about 10 percent this year, steeper than bigger rival Coca Cola's 3.2 percent drop.

has also been trying to overcome its by ramping up its snacks through a mix of new flavors, healthier preparation methods and attractive packaging.

These efforts led to a 4.3 percent rise in sales at its division that makes Cheetos and

Net income attributable to the company fell about 14 percent to $1.82 billion, in the quarter ended June 16, mainly due to higher costs for and raw materials.

Excluding items, earned $1.61 per share, beating analysts' average estimate of $1.52 per share, according to I/B/E/S.

Net revenue rose 2.4 percent to $16.09 billion, edging past expectations.

(Reporting by in Bengaluru; Editing by Arun Koyyur)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, July 10 2018. 17:12 IST