PepsiCo third quarter profit climbs on cost cuts; sales fall

Thursday, October 8, 2009
A delivery driver loads Pepsi products on a cart to be delivered to a convenience story in Orlando, Fla., Wednesday. Soft drinks and snack maker PepsiCo said today, its fiscal third-quarter profit rose 9 percent, partly on cost-control efforts.(AP Photo/John Raoux)

PURCHASE, N.Y. -- Soft drinks and snack maker PepsiCo Inc. said today that its fiscal third-quarter profit rose 9 percent, in part on cost-control efforts, even as revenue dropped on weak beverage sales.

The maker of Pepsi cola and Frito-Lay snacks earned $1.72 billion, or $1.09 per share, in the three months ended Sept. 5. That's up from the $1.58 billion, or 99 cents per share, a year ago.

Analysts polled by Thomson Reuters, whose estimates typically exclude one-time items, forecast profit of $1.03 per share.

Purchase, N.Y.-based PepsiCo Inc., which also sells the Gatorade and Tropicana brands, said its sales slipped 1 percent to $11.08 billion from $11.24 billion. The results fell short of Wall Street's $11.25 billion estimate.

Sales were hindered by weakness in its PepsiCo Americas Beverages unit, which reported a 6 percent drop in volume and a 9 percent revenue decline. The results somewhat reflect a change in shoppers' buying habits, as consumers shift toward juices and teas and away from soft drinks.

Costs fell faster than revenue, with selling, general and administrative expenses down 8 percent to $3.65 billion.

PepsiCo, which is in the midst of acquiring bottlers Pepsi Bottling Group Inc. and PepsiAmericas Inc., has seen its sales helped by strength in its snack business.

The Frito-Lay North America division reported revenue climbed 5 percent in the quarter while volume rose 3 percent. The company said its Lay's brand posted high single-digit growth and its Sabra joint venture and variety packs experienced solid gains.

PepsiCo's other major food business, Quaker Foods North America, also posted revenue gains. Food makers in general have benefited during the recession as strapped consumers eat at home more to save money.

The company also saw strength abroad, with sales increases at PepsiCo International and Asia, Middle East and Africa divisions.

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