The Canadian Press - ONLINE EDITION

PepsiCo raises forecast after profit beats Wall Street estimates; looks to new Lay's flavours

  • Print
Bottles of Pepsi sit in a grocery store in Springfield, Ill. on Feb. 9, 2011. THE CANADIAN PRESS/AP, Seth Perlman

Enlarge Image

Bottles of Pepsi sit in a grocery store in Springfield, Ill. on Feb. 9, 2011. THE CANADIAN PRESS/AP, Seth Perlman

PURCHASE, N.Y. - PepsiCo raised its forecast for the year on Wednesday and said its new Lay's potato chips — including a cappuccino variety — should help boost its profit in the months ahead.

The company, which also owns Tropicana, Gatorade and Quaker, said global volume for both its snacks and drinks rose 1 per cent in the second quarter. The gains were relatively modest, but PepsiCo has been driving its financial performance with a cost-cutting plan expected to generate $1 billion in savings this year.

In its Frito-Lay North America division, PepsiCo said lower prices helped lift sales volume. Although the performance was muted, Chief Financial Officer Hugh Johnston noted in a phone interview that the unit is expected to benefit in the current quarter from the rollout of special flavours — Cappuccino, Mango Salsa, Wasabi Ginger and Bacon Mac & Cheese.

The varieties were recently announced as finalists for the company's annual "Do Us a Flavor" contest, which gives customers a chance to create a new variety that is sold nationwide. The chips have so far received mixed reviews, but the contest is designed to pique curiosity and drive people to stores.

Johnston said such special flavours are also more profitable for the company, even if the prices are the same as regular flavours. That's because PepsiCo puts fewer chips in those bags.

"There might be an ounce or two less," Johnston said.

A representative for PepsiCo said regular Lay's come in 10-ounce bags and flavoured Lay's come in 9.5-ounce bags. At those sizes, all bags have a suggested price of $4.29.

In its closely watched North American beverage business, soda volume fell 2 per cent while non-carbonated drinks rose 1 per cent. On Monday, Coca-Cola also said non-carbonated drinks rose 1 per cent, while soda volume was flat. The two companies have been struggling to boost beverage volumes in the region, given the growing competition from smaller players and the shift away from soda that has been underway for years.

PepsiCo now expects core earnings per share to rise 8 per cent from 2013, instead of the 7 per cent increase it previously forecast.

For the quarter, the Purchase, New York-based company said net income fell to $1.98 billion, or $1.29 per share. That was down 2 per cent from a year ago, as restructuring and impairment charges took their toll.

Adjusted for one-time charges, earnings were $1.32 per share, topping the $1.23 analysts expected, according to Zacks Investment Research.

Revenue edged up to $16.89 billion, matching Wall Street forecasts.

PepsiCo shares have increased $6.23, or 7.5 per cent, to $89.17 since the beginning of the year, while the Standard & Poor's 500 index has climbed 7.3 per cent. The stock has climbed $2.97, or 3.4 per cent, in the last 12 months.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Winnipeg Jet goalie Michael Hutchinson

View more like this

Photo Store Gallery

  • Marc Gallant / Winnipeg Free Press. Local- Weather standup. Sundog. Refraction of light through ice crystals which caused both the sun dog and and fog along McPhillips Road early Wednesday morning. 071205.
  • Two baby tigers were unveiled at the Assiniboine Park Zoo this morning, October 3rd, 2011. (TREVOR HAGAN/WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Should the federal government be able to censor how Ottawa is portrayed in the CMHR?

View Results

Ads by Google