Operating profit of PepsiCo Americas Foods totaled $1,192 million in the second quarter ended June 12, up from $1,155 million in the same period a year ago. For the six months ended June 12, profit rose 3% to $2,260 million from $2,191 million.
Sales for PepsiCo Americas Foods rose 4% in the second quarter to $5,112 million from $4,912 million, and 4% in the first half to $9,642 million from $9,264 million.
PepsiCo said operating profit was driven by its F.LN.A. unit, which posted an 8% gain in profit and 2% increase in sales during the second quarter.
“Frito-Lay North America delivered volume and top-line results in line with expectations as it overlapped the ‘20% More Free’ promotion launched in the second quarter of 2009,” PepsiCo said. “Operating profit benefited from improved costs. F.L.N.A. gained salty-snack dollar share in measured channels and unit growth was positive as trends improved in both convenience-and-gas store channel and food service vending accounts.”
The sharp gains at F.L.N.A. helped offset a 13% decline in profit and 4% decline in sales at Q.F.N.A. in the second quarter.
“Quaker Foods North America posted declines in volume, net revenue and core operating profit largely driven by declines in ready-to-eat cereals,” PepsiCo said. “Q.F.N.A. is making investments in innovation and value to refocus and extend the advantages for its hallmark health and wellness brand as PepsiCo seeks to expand its global ‘good for you’ portfolio of products.”
The third component of PepsiCo Americas Foods, Latin America Foods, sustained a 3% decline in operating profit but registered a 12% gain in sales.
Overall, PepsiCo net income in the quarter ended June 12 totaled $1,613 million, equal to 98c per share on the common stock, down from $1,668 million, or $1.06 per share, during the same quarter of the previous year. The most recent results included $155 million in expenses associated with the acquisitions of The Pepsi Bottling Group, Inc. and PepsiAmericas, Inc.
Revenue, meanwhile, was $14,801 million, up 40% from $10,592 million during the same quarter of the previous year. Revenues were boosted by the addition of the two anchor bottlers.
“We posted a solid second quarter, exceeding our core constant currency e.p.s. growth target for the first half of the year,” said Indra Nooyi, chairman and chief executive officer. “Our results reflect our ability to generate sustainable growth across a global snack and beverage portfolio despite continued macroeconomic challenges. In line with our plan, our bottler integration is on track and unlocking opportunities and efficiencies. We continue to make investments in near- and long-term opportunities across both our developed and emerging markets, and I’m very pleased that we’ve taken a disciplined approach to our activities in North America.”
Overall, for the six months ended June 12 PepsiCo had net income of $3,033 million, or $1.87 per share, up from $2,795 million, or $1.78 per share, in the same period a year ago. Net sales rose 28% to $24,169 million from $18,855 million.
Looking ahead, PepsiCo said it expects an 11% to 13% increase in 2010 earnings, which would put earnings at $4.12 to $4.19 per share.