PepsiCo sees mixed results in Frito-Lay, Quaker units

by Bakingbusiness Staff
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PURCHASE, N.Y. — Promotions for core brands helped drive operating profit and sales within PepsiCo, Inc.’s Frito-Lay North America subsidiary, while competition from private label was a drag on the company’s Quaker Foods North America unit during the second quarter of fiscal 2009.

F.L.N.A. operating profit in the second quarter ended June 13 was $783 million, up 7% from $735 million during the same period of fiscal 2008. Revenue in the segment was $3,138 million, up 6% from $2,950 million. For the first six months of fiscal 2009, operating income was $1,480 million, up 8% from $1,368 million, while sales also rose 8% to $6,138 million.

"Volume growth (up 3%) was driven by strong performance in F.L.N.A.’s core brands such as Lay’s and Doritos, supported in part by the ‘20% more’ promotion on its take-home sized, corn-based offerings," the company said. "Dips and Multipacks, together with healthy adjacencies to the core portfolio such as TrueNorth nuts, Sabra dips, Spitz seeds and Stacy’s pita chips, also contributed to the growth in volume."

F.L.N.A. said product innovation highlights during the quarter included line extensions of core brands, including Doritos Late Night and Giant Cheetos.

Q.F.N.A. operating profit in second quarter was $132 million, up 8% from $122 million in the same period a year ago. Sales fell 3% to $396 million. For the first six months of fiscal 2009, operating profit was $307 million, up 7% from $288 million, while sales were $881 million, down from $901 million.

The company said it suffered volume declines during the quarter as value conscious consumers traded down to lower priced offerings. This particularly was the case in the company’s oatmeal business.

"We continue to focus on the global expansion of the Quaker franchise while innovating for the value consumer in the meantime," the company said.

Companywide, PepsiCo net income in the second quarter totaled $1,660 million, equal to $1.06 per share on the common stock, down from $1,699 million, or $1.05 per share, during the same period of fiscal 2008. Net revenue was $10,592 million, down from $10,945 million. For the first six months of fiscal 2009, net income was $2,795 million, or $1.78 per share, down from $2,847 million, or $1.76 per share. Net sales for the first half were $18,855 million, down 2% from $19,278 million.

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