PepsiCo today (10 February) revealed that it expects its profit growth to slow in 2011 due to higher commodity costs, “difficult” conditions in developed countries and investment in emerging markets.

The US snacks and soft drinks giant grew its core earnings per share – earnings excluding one-time charges – by 12% on a constant-currency basis in 2010, hitting its target of 11-12% growth.

However, the Quaker cereal and Walkers crisps maker, is targeting growth of 7-8% in 2011, slower than that achieved in 2010. It cited “high global commodity cost inflation, difficult macroeconomic conditions in developed markets and ongoing strategic investments in emerging markets and in brand-building activities” for its lower growth target.

PepsiCo recorded a 6% increase in full-year profits for 2010, driven by gains from its global snacks and beverage businesses and the acquisition of its bottlers in early 2010.

Net profit totalled US$6.32bn in 2010, a 6% increase on 2009, the soft drinks and snacks giant reported today (10 February). Operating profit rose by 4% to $8.33bn. Sales climbed 34% to $57.84bn.

However, in the fourth quarter, net profit slid 5% to $1.36bn due in part to higher interest costs. Nevertheless, operating profit increased 10% to $2.23bn on the back of a 37% jump in fourth-quarter sales to $18.15bn.

For the full year, PepsiCo’s Frito-Lay North America snacks business saw sales edge up just 1%, impacted by the implementation of a “20% More Free” promotion. 

A 3% drop in revenues in the Quaker division in 2010 reflected declines in the hot cereals and ready-to-eat cereals categories, and a competitive pricing environment, PepsiCo said.

PepsiCo’s Latin America Foods division saw sales increase by 29% to $388m, while in Asia, Middle East and Africa sales climbed 19% to $2.67bn.

“We are pleased with PepsiCo’s performance in the fourth quarter and for the full year,” PepsiCo chairman and CEO Indra Nooyi said: “The underlying performance of our businesses remained solid despite a challenging macroeconomic environment. We posted broad-based worldwide gains in both snacks and beverages, our businesses deftly balanced a delicate price-value consumer equation, and we aggressively managed costs and productivity to deliver top-tier financial results.”

Click here to view the full earnings release and click here for coverage of PepsiCo’s media call with CFO Hugh Johnston.