Tags: PepsiCo | Lowers | Top | End | Annual | Profit | Forecast

Shares Fall After PepsiCo Lowers Top End of Annual Profit Forecast

Thursday, 07 Oct 2010 10:08 AM

PepsiCo Inc. trimmed the top end of its full-year earnings forecast, citing a tough economic environment that has hampered consumer spending, and its shares fell 2.5 percent.

"There is no doubt that economic uncertainty and high unemployment levels are keeping a consumer-led recovery at bay in many regions, especially in developed markets like the United States and Western Europe," Chief Executive Indra Nooyi told analysts on a conference call. "We expect these conditions to persist."

She added that throughout the world consumers remain "very value conscious."

In response to questions about its earnings forecast, executives said no businesses were underperforming but the soft drink and snack maker was stepping up investments in developing markets, including China, and in its North American beverage business and research.

Chief Financial Officer Hugh Johnston said the increased investments were in addition to the 10 cents a share the company earmarked at the start of the year for strategic spending on existing operations. He declined to say how much the additional spending totaled on a per-share basis.

Nooyi said the return on investments made in developing markets is not immediate and more for the long term.

PepsiCo also announced the creation of a global nutrition group focused on fruits, vegetables, grains and dairy, part of its strategy to triple the revenue of its nutrition business to $30 billion by 2020.

The company said third-quarter net income rose to $1.92 billion, or $1.19 a share, from $1.72 billion, or $1.09 a share, a year earlier. Results were boosted by PepsiCo's acquisition of its two biggest bottlers and broad gains in snacks and beverages in key international markets.

Excluding one-time items, earnings were $1.22 a share, matching the average forecast of analysts polled by Thomson Reuters I/B/E/S.

Revenue rose 40 percent to $15.5 billion, helped by the bottler acquisitions. Analysts had expected $15.35 billion.

The $7.8 billion deals closed in late February. PepsiCo aims to cut costs and streamline distribution of its drinks throughout North America, where performance has been sluggish for some time.

Rival Coca-Cola Co closed on a similar deal Sunday.

PepsiCo trimmed the high end of its full-year earnings forecast, saying it expects earnings per share, excluding currency fluctuations and one-time items, to rise 11 percent to 12 percent. It previously forecast a rise of 11 percent to 13 percent.

PepsiCo said the new Global Nutrition Group will be based in Chicago and run by chief scientific officer Mehmood Khan, who has been named chief executive of the group.

PepsiCo repeated that it is targeting $400 million in cost savings once the bottlers are fully integrated in 2012. It has already outlined plans to change how its Gatorade sports drink is delivered.

The company said it expects to realize savings from the deals of about $150 million in 2010. It also said it expects $3.3 billion in capital spending for the year.

The company's shares fell 3 percent, or $2.02, to $66.09 in early trading on the New York Stock Exchange.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
Companies
PepsiCo Inc. trimmed the top end of its full-year earnings forecast, citing a tough economic environment that has hampered consumer spending, and its shares fell 2.5 percent. There is no doubt that economic uncertainty and high unemployment levels are keeping a...
PepsiCo,Lowers,Top,End,Annual,Profit,Forecast
497
2010-08-07
Thursday, 07 Oct 2010 10:08 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved