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Issue Date: Vol. 51, No. 8, August 2011, Posted On: 7/26/2011

PepsiCo Posts Q2 Gains, Lowers Forecast And Plans Price Hikes

Emily Jed
PepsiCo Inc., Pepsi, Frito-Lay, Pepsico second quarter, soft drink commodity costs, vending, vending machine, vending machine business, Indra Nooyi, beverage news

PURCHASE, NY -- PepsiCo Inc. posted higher sales and profits during the second quarter of 2011, driven primarily by growth in emerging markets. But the company lowered its growth projections for the year in light of rising commodity costs and economic uncertainty in developed markets.

The drink and snack food giant's second-quarter net income rose to $1.89 billion, or $1.17 a share, from $1.6 billion, or 98¢, a year earlier. Sales for the quarter, ended June 11, rose 14% to $16.8 billion. Global snack sales volume grew 10%, and beverage volume gained 5%. Domestically, Frito-Lay North America volume rose 2%, while PepsiCo America's volume fell 1%.

PepsiCo chief executive Indra Nooyi said weaker consumer demand prompted the company to delay previously announced price hikes to offset higher ingredient and plastic packaging costs. With these costs forecast to rise to nearly $1.6 billion this year, the high end of PepsiCo's prior estimates, Nooyi said the company will begin implementing price increases in the third quarter.

The Purchase, NY-based company now expects profit growth of 5% to 7% in 2011, down from its April forecast that profit for the year would rise 7% to 8%.

"While we are satisfied with the performance of our portfolio overall, the consumer in developed markets continues to be stressed, and the competitive environment in North America beverages has been particularly challenging," Nooyi said.

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