Reuters: Hot Stocks: UPDATE 3-Price increases boost PepsiCo profit beyond expectations

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UPDATE 3-Price increases boost PepsiCo profit beyond expectations Apr 18th 2013, 14:28 Thu Apr 18, 2013 10:28am EDT * 1st-qtr EPS 77 cents tops Wall St estimate of 71 cents/shr * Stands by 2013 outlook, saying it may reinvest in business * Shares up 5 percent in morning trading (Adds analyst comment, updates shares to market open) By Martinne Geller April 18 (Reuters) - PepsiCo Inc posted better-than-expected quarterly earnings on Thursday, as price increases helped margins, sending its shares up more than 5 percent. The strong results come after a "transition year" in 2012, during which the maker of Pepsi sodas, Tropicana juices and Frito-Lay snacks sacrificed profits and made advertising and marketing improvements and launched new products such as the mid-calorie cola Pepsi Next. "The business momentum continues to look solid, as PepsiCo delivered its first earnings growth quarter in over a year," JP Morgan analyst John Faucher said, noting that the company's stock had been weaker than its peers in the past few days. Despite the better-than-expected first quarter, Chief Financial Officer Hugh Johnston told analysts not to increase their 2013 estimates. "The world remains a volatile place and we may also choose to incrementally invest in the long-term value building initiatives such as advertising, innovation and in emerging markets growth capacity," Johnston said. Net income was $1.08 billion, or 69 cents per share in the first quarter, down from $1.13 billion, or 71 cents per share, a year earlier. Excluding a hit from the Venezuelan currency devaluation, restructuring charges and other items, earnings were 77 cents per share, a 12 percent increase from a year earlier. On that basis, analysts on average were expecting 71 cents per share, according to Thomson Reuters I/B/E/S. Revenue rose about 1 percent to $12.58 billion. Earlier this week, Coke reported a slightly better-than-expected profit and said it was taking steps to refranchise its U.S. distribution system, less than three years after acquiring the bulk of it in a $12.3 billion deal. Coke's 2010 acquisition followed a similar move by PepsiCo, which said on Thursday that it was exploring structural alternatives, but would not discuss it until early next year. PepsiCo, based in Purchase, New York, said it still expects 2013 earnings to grow 7 percent from the $4.10 per share it earned in 2012. Its shares rose $4.02, or 5 percent to $82.86 in morning trading on the New York Stock Exchange. (Reporting by Martinne Geller in New York; Editing by Gerald E. McCormick and Maureen Bavdek) Link this Share this Digg this Email Reprints

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