PepsiCo tops expectations, with help of Frito Lay’s popularity

Company will slash costs, focus on advertising to increase sales

Associated Press April 23, 2015

PepsiCo‘s profit in the first quarter topped Wall Street expectations, boosted by the popularity of its Frito-Lay snacks and lower costs.

The global food-and-beverage maker said its snacks unit saw volume climb 3% in North America. Its beverage unit for the Americas, which includes Mountain Dew and Gatorade, saw volume decline 1%.

Snack and beverage volumes rose in the unit encompassing Asia, the Middle East and Africa. But volumes fell in Europe, and the company’s overall revenue was dragged down by unfavourable currency exchange rates.

PepsiCo said it now expects currency translations to hit its core earnings per share by 11 percentage points. It had previously said it expected a hit of seven percentage points.

Like other companies that are facing slower growth, PepsiCo has said it will slash costs and focus on advertising to increase sales.

During the quarter, PepsiCo said its advertising and marketing expenses rose in the double digit percentages for Frito-Lay and Quarter Foods unit. For the Americas beverages unit, it rose in the high single digits.

For the three months ended March 21, PepsiCo Inc. earned $1.22 billion.

Revenue declined to $12.2 billion, but was more than $12.1 billion Wall Street expected.