Frito-Lay Growth Offsets Beverage Slump In PepsiCo's Third Quarter

Posted On: 10/12/2017

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PURCHASE, NY -- PepsiCo Inc.'s profit climbed in the third quarter despite a drop in demand for its beverages in the United States, thanks to a surge in sales of its Frito-Lay snacks.

The beverage giant reported net income of $2.14 billion, or $1.49 a share, for the third quarter, ending Sept. 9. That compares with $1.99 billion, or $1.37 per share, in the same quarter a year ago. Revenue rose 1% to $16.24 billion from $16 billion year over year.

Revenue from PepsiCo's Frito-Lay business, which includes Lay's and Doritos snacks, rose 3.2% in the third quarter, thanks in part to higher demand for its jalapeno-flavored Cheetos and Ruffles chips. 

Revenue from beverages in North America, PepsiCo's biggest market, fell 3.4% to $5.33 billion in the quarter, partly attributable to weak performance of its Gatorade brand. PepsiCo chief Indra Nooyi also acknowledged that the beverage giant devoted too much shelf space and too many marketing dollars to low-calorie drinks.

While sales volume in the business fell 6%, net pricing rose 1%.

The Purchase, NY, company said it now expects its earnings for the full year to be $5.23 per share, up from its previous forecast of $5.13 per share.