Friday, February 27th5.9°C
25355
24893

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

25195


Recent Trending




Today's Market
S&P TSX15265.71+24.55
S&P CDNX704.11+3.18
DJIA18132.38-82.04
Nasdaq4963.528-24.362
S&P 5002104.49-6.25
CDN Dollar0.7998+0.0007
Gold1203.00+6.10
Oil51.64+1.25
Lumber296.70+1.20
Natural Gas2.895-0.007

 
Okanagan Companies
Pacific Safety0.12+0.005
Knighthawk0.010.00
QHR Technologies Inc1.55-0.03
Cantex0.035-0.005
Anavex Life Sciences0.190.00
Metalex Ventures0.035-0.005
Russel Metals25.48+0.18
Copper Mountain Mining1.30+0.04
Colorado Resources0.15+0.015
ReliaBrand Inc0.008-0.0007
Sunrise Resources Ltd0.05+0.015
Mission Ready Services0.235+0.025

 



25320

FEATURED Property
21982221114 Oswell Drive
3 bedrooms 3 baths
$599,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


Creating your retirement vision

A vision means different things to different people. To the head of a large corporation, it’s the ability to chart a course that will deliver success (think Steve Jobs and Apple), to a shaman, i...


It's OK to say 'I'm sorry'

Photo: ContributedStand-up comedians and sitcoms have been making fun of Canadians for being polite as long as I can remember. Being known for our niceness is certainly not a bad thing and I wish more...


Are you asking the right questions?

Have you ever had this happen to you? You are in the middle of your second or third good discussion with a prospect and everything seems to be going great. The prospect seems engaged and happy to work...

_








Member of BC Press Council


24843