Monday, May 25th13.7°C
25936
25546

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

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.

The Canadian Press


Read more Business News

26416


Recent Trending




Today's Market
S&P TSX15195.43-5.33
S&P CDNX701.95-1.53
DJIA18232.02-53.72
Nasdaq5089.36-1.43
S&P 5002126.06-4.76
CDN Dollar0.8127-0.0006
Gold1204.30+1.30
Oil57.45-1.98
Lumber273.80+3.70
Natural Gas2.887-0.064

 
Okanagan Companies
Pacific Safety0.14+0.01
Knighthawk0.010.00
QHR Technologies Inc1.49+0.01
Cantex0.03-0.01
Anavex Life Sciences0.425+0.053
Metalex Ventures0.09+0.01
Russel Metals25.86+0.07
Copper Mountain Mining1.33-0.05
Colorado Resources0.105+0.005
ReliaBrand Inc0.0048-0.0049
Sunrise Resources Ltd0.04+0.01
Mission Ready Services0.175-0.010
Decisive Dividend Corporation2.20+0.60

 



26396

FEATURED Property
20610084099 June Springs Rd
$1,250,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Cash stressed seniors

Photo: Thinkstock.comFor many Canadian homeowners, their house represents the biggest portion of their net worth. Now, increasing numbers of seniors are starting to recognize the hidden value of their...


Do or do not

Photo: Thinkstock.com“The optimist sees the rose and not its thorns; the pessimist stares at the thorns, oblivious of the rose.” - Kahlil Gibran Good planning is all about managing chan...


Penetrate the smokescreen

Photo: ContributedHas this ever happened to you? You’re in the middle of your second or third “good discussion” with a prospect. Everything’s going great. The prospect seems en...

_








Member of BC Press Council


24843