Pepsico reports 49.1% increase in profits in 3rd quarter


Shrugging off the weak economy, Pepsico Inc. posted strong third-quarter profit gains in its soft-drink, potato chip and fast-food businesses.

The company said yesterday that its net income soared 49.1 percent to $425.7 million, compared with $285.4 million in the corresponding period last year, and that earnings per share jumped to 53 cents from 36 cents.

Last year, Pepsico took a restructuring charge of $62.4 million in the third quarter, which partly accounts for the sharp percentage increases.

Excluding the charge, taken for cost-cutting measures in the snack-food unit, profits in the most recent quarter rose 22 percent.

Revenue for the quarter rose by 15.6 percent, to $5.64 billion, compared with $4.88 billion last year.

Wayne Calloway, Pepsico's chairman and chief executive, said, "This is excellent performance in light of soft overall trends in the marketplace."

He added, "Our ability to buck less-than-ideal consumer trends is one of Pepsico's greatest strengths."

The snack-food, soft-drink and fast-food businesses each showeddouble-digit profit growth. "It was a very strong operating performance in the face of a much weaker global economy," said Michael Branca, an analyst with County NatWest U.S.A.

Analysts gave the company high marks for carefully managing its businesses in the poor economy.

Mr. Branca said Pepsi's executives had focused in recent years on reducing costs. Also, other than in soft drinks, the company has been cautious in raising prices.

Recent acquisitions overseas also made a significant contribution to sales and operating profits in the quarter, the company said.

Earnings were at the high end of analysts' expectations. After touching an all-time high of $39.25 during the day, the stock closed up 75 cents a share yesterday, at $38.625, on the New York Stock Exchange.

"The market's love affair with Pepsi has returned," said Lawrence Adelman, an analyst with Dean Witter Reynolds.

Despite the rising profits, Pepsi's case sales were off 3 percent in the domestic soft-drink business. Cool weather in the summer and the weak economy led to an industrywide slowdown.

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