PepsiCo benefits from cost cuts, strong North America snack sales

Mon Apr 18, 2016 12:05pm EDT
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By Yashaswini Swamynathan

(Reuters) - PepsiCo Inc (PEP.N: Quote) reported a better-than-expected quarterly profit as it trimmed costs and demand rose in North America for its snacks, which include Cheetos and Lay's chips.

The company's shares rose as much as 0.8 percent to $104.59 in morning trading on Monday.

PepsiCo has handled sliding demand for fizzy sodas better than rival Coca-Cola Co (KO.N: Quote) as its snacks business has offset much of the impact of a shift in consumer tastes to teas, fruit juices and smoothies.

The maker of Tropicana juices is also trying to attract health-conscious consumers with snacks such as Smartfoods Delight popcorn and gluten-free Quaker oats.

Sales in its North America snacks business, which accounts for over a quarter of total revenue, rose 3 percent in the first quarter ended March 19.

Global beverage volumes rose 3 percent, excluding the impact of currency, acquisitions and divestitures - the highest quarterly growth in almost three years.

Demand was strong for its Naked cold-pressed fruit and vegetable juices and Lipton teas, the company said.

"We broadened our beverage portfolio to lessen our reliance on colas..." Chief Executive Indra Nooyi said, adding that just 12 percent of revenue now comes from Pepsi colas and less than 25 percent from fizzy drinks globally.   Continued...

A bottle of Pepsi is seen in this file photo illustration February 10, 2015. REUTERS/Jim Young/Illustration/Files