US snack food giant PepsiCo has booked a 20% decline in first-quarter net income despite strong sales gains during the period.
For the quarter ended 19 March, the company reported earnings of US$1.14bn, or 71 cents a share, down from $1.43bn, or 89 cents a share, in the same period a year ago.
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The Frito Lay owner said that the decline was the consequence of a higher net interest expense in 2011, primarily related to bottler acquisitions, and a higher core tax rate.
Sales gained 27% in the three months, climbing to $11.94bn thanks to solid organic volume growth and the acquisition of Russian dairy group Wimm-Bill-Dann.
“We are pleased with the broad-based volume and net revenue growth in the quarter. Growth in emerging markets was strong, driving attractive gains in Eastern Europe, Asia and the Middle East,” chairman and CEO Indra Nooyi said. “Importantly, we had strong volume growth in both our Frito-Lay snacks and North American beverage businesses, with each up 2% on an organic basis over the prior year.”
PepsiCo finance chief Hugh Johnston said that the company is experiencing a “high level” of input cost inflation. However, he insisted that margins were being managed through a combination of “productivity programs, prudent pricing actions and systematic hedging”.
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By GlobalDataPepsiCo said that it expects full-year core earnings grow between 7% and 8%.
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