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Strong sales across board for Pepsi

By Charlotte Eyre , 25-Jul-2007

PepsiCo yesterday reported revenue growth of 10 per cent for the quarter ending 16 June, thanks to strong performances across most business segments.

Revenues came in ahead of Wall Street's expectations, despite a small decline in sales of certain brands such as Gatorade and Frito-Lay .

 

 

 

Company chairman Indra Nooyi said that growth is due to strong businesses around the world, as well as a balanced portfolio.

 

 

 

"All of our lines of business performed at or above our expectations, enabling us to generate strong division profit growth while lapping last year's best quarter," she added.

 

 

 

At PepsiCo Beverages North America, overall profit rose four per cent, despite sales of carbonated drinks falling three per cent. Non-carbonated volume performance was led by Lipton teas, growing over 30 per cent, and the Aquafina water brand, the company said.

 

 

 

Non-carbonated beverage growth was offset, however, by a poorer sales of Tropicana juice and Gatorade sports drinks.

 

 

 

Sales at Frito-Lay North America rose six per cent, while operating profit rose eight per cent, despite poor sales of Trademark Lay's.

 

 

 

The company attributed this result to margin expansion, and double digit growth in sales of Doritos, Sunchips and Quaker rice snacks.

 

 

 

Revenue at Quaker Foods North America increased by the slightly smaller four per cent, and operating profit grew by two per cent.

 

 

 

The highest profit margins for the company were achieved outside North America.

 

 

 

"On the international side, strong volume gains in snacks and beverages resulted in continued double-digit revenue and operating profit growth. Profit growth was broad based across our geographies," Nooyi said.

 

 

 

International snacks sales grew nine per cent, with double digit growth in Russi, India and Mexico offsetting a one per cent decline in the UK.

 

 

 

The UK did however experience growth for beverages, helping to boost an eight per cent growth in volumes along with Pakistan, Russia, the Middle East and China.

 

 

 

The company's overall profit margin declined 0.2 per cent from the same period last year, however the operating profit margin was still at a high 22.2 per cent.

 

 

 

Pepsi's business is currently largely focused on drinks and snacks, primarily in the US, but the company is reportedly looking to expand its operations worldwide.

 

 

 

Noori told Bloomberg this morning that the company may spend $5m to $2bn on buying products that would help its offerings more closely mirror the ``food pyramid'' created by the US Agriculture Department. The guidelines promote consumption of grains, proteins, fruits and vegetables, rather than salty and sugary foods.

 

 

 

The Wall Street Journal reported last week that Pepsi attempted a merger with Nestle last year. Nestle did not confirm the rumour, while Pepsi has denied it made an approach.

 

 

 

Over recent months, Pepsi has also acquired businesses in emerging markets such as Ukraine, China and Egypt, as well as purchasing New Zealand's Bluebird Foods Ltd., which makes potato chips and granola bars, in January for $168m.