PepsiCo Inc reported a higher-than-expected quarterly profit on Thursday, helped by increased sales volumes of snacks and beverages, and its shares rose nearly 2 percent.
The company, which is buying Pepsi Bottling Group Inc and PepsiAmericas Inc for $7.8 billion, also affirmed its 2009 earnings target.
PepsiCo said it would continue to make investments in its portfolio, which ranges from sodas and Tropicana juices to Frito-Lay snacks and Quaker oatmeal.
We expect these (investments) to ramp up next year as we begin to realize the benefits of the integration of our two anchor bottlers, Chief Executive Indra Nooyi said in a statement.
The company forecast 2010 earnings-per-share growth of 11 percent to 13 percent on a constant currency basis. If it performs better than that range, Chief Financial Officer Richard Goodman said PepsiCo would make additional strategic broad-based investments in its business.
Net income rose to $1.72 billion, or $1.09 per share, in the third quarter from $1.58 billion, or 99 cents per share, a year earlier.
Excluding items, PepsiCo earned $1.08 per share. Analysts on average were expecting $1.03, according to Thomson Reuters I/B/E/S.
Revenue fell 1.5 percent to $11.08 billion.
Sales by volume rose 2 percent in PepsiCo's snacks business, both in the Americas and internationally.
In the drinks business, volume was up 0.5 percent, with a decline of 6 percent in the Americas and a rise of 9 percent internationally.
Buying its two largest bottlers will consolidate 80 percent of PepsiCo's North American drinks volume, which it has said will speed decision-making and eliminate friction between the companies.
Pepsi has said the deal, which it expects to close in late 2009 or early 2010, should produce annual savings of $300 million by 2012.
Earlier this week, Pepsi Bottling reported weaker-than-expected quarterly revenue, hurt by lower sales volume in the United States, Canada and Europe.
PepsiCo said it still expected 2009 net revenue and core earnings per share to rise at a mid-to-high-single-digit percentage rate on a constant currency basis. Its 2008 core earnings were $3.68 per share.
Analysts on average were expecting earnings per share of $3.71 for 2009 and $4.11 for 2010. Based on those forecasts, that would mean an increase of nearly 11 percent next year.
PepsiCo shares were up 1.9 percent at $62.34 in premarket trade.
(Reporting by Martinne Geller; Editing by Lisa Von Ahn)