NEW YORK - PepsiCo Inc., the world's second-largest soft drink maker, said Thursday its fourth-quarter profit fell 31 percent from a year earlier, when results were boosted by a tax benefit. Without the benefit, earnings rose 8 percent.
The $602 million tax benefit — which added $128 million, or 36 cents per share, to the 2006 bottom line — was the result of a settlement with the Internal Revenue Service over a review of 1998-2002 returns.
The company, which also owns the Frito-Lay snacks business, said it expects earnings and revenue growth in 2008. Its shares rose 5.5 percent.
Net income dropped to $1.26 billion, or 77 cents per share, in the last three months of 2007 from $1.83 billion, or $1.09 per share, a year ago.
Excluding the tax benefit and certain restructuring costs, the company said it earned 80 cents per share in the latest quarter versus 74 cents a share a year earlier, putting it one penny ahead of analysts' expectations.
Analysts surveyed by Thomson Financial, who normally exclude one-time charges, had predicted earnings of 79 cents per share on revenue of $11.56 billion.
Revenue in the October-to-December quarter rose 17 percent to $12.35 billion.
Chief Executive Indra Nooyi said the company has been able to leverage its strong brands to deal with higher commodity costs. The company's current projections are for mid-single digit growth in commodity prices, and executives are especially concerned with price increases for energy and grains, such as wheat, corn and oats.
Chief Financial Officer Richard Goodman said Frito-Lay and PepsiCo International performed particularly well. Frito-Lay posted "very, very solid" 3 percent volume growth and 8 percent revenue growth, he said.
"International just continues to be a terrific story," Goodman added. The international business had revenue growth of 26 percent in the quarter with snacks volume up 8 percent and beverages volume up 9 percent.
For all of 2007, the company earned $5.66 billion, or $3.41 a share, versus $5.64 billion, or $3.34 a share, in 2006. Core earnings, a measure the company used to exclude one-time costs — rose 13 percent to $3.38 a share from $3 a share in 2006.
Revenue for the full year rose 12 percent to $39.47 billion from $35.14 billion.
PepsiCo said it expected 3 percent to 5 percent volume growth, mid- to high-single digit revenue growth and full-year earnings per share of $3.72 in 2008. That reflects a 10 percent growth rate from last year.
Its shares rose $3.68, or 5.5 percent, to $70.41 Thursday.
Analyst Bill Pecoriello of Morgan Stanley told investors the quarterly results were in line with expectations, and the company's stock could be better off given its outlook for the year.
"The market was certainly worried the guidance could have been lower as indicated by recent share performance," Pecoriello wrote in a research note.
Executives said Thursday they planned to introduce a number of new products this year.
In North and South America, the lineup included drinks such as a new low-calorie Gatorade called G2, a Tiger Woods-branded Gatorade, an energy drink called Amp and Tropicana Pure Valencia orange juice, which is made with the top 3 percent of the company's harvested fruit.
Snacks include True North nut clusters, nut chips and flavored nuts; Quaker Stila bars and granola pops and Pinch of Salt Ruffles. Frito-Lay said earlier this year it had also started a joint venture with hummus maker Sabra.
New products overseas included a Lay's sausage-flavored chip called Shaslik in Russia, baked bread chips in Turkey and the expansion of a drink called H2OH.
Purchase, N.Y.-based PepsiCo, which is second only to The Coca-Cola Co. in soft drink sales, has been expanding its non-cola and snacks portfolio. Recent details include expansions of partnerships with Unilever NV for Lipton-brand ready-to-drink teas and Starbucks to sell Starbucks Frappucino bottled drinks in China.
The company spent $1.3 billion on acquisitions in 2007, and Nooyi, the CEO, said the company had a robust pipeline of deals.
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